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A firm with a 13% cost of capital must select the optimal group of projects from those shown in the following table, given its capital
A firm with a 13% cost of capital must select the optimal group of projects from those shown in the following table, given its capital budget of $1 million.
Project | Initial Investment | NPV at 13% cost of capital |
A | (300,000.00) | 84,000.00 |
B | (200,000.00) | 10,000.00 |
C | (100,000.00) | 25,000.00 |
D | (900,000.00) | 90,000.00 |
E | (500,000.00) | 70,000.00 |
F | (100,000.00) | 50,000.00 |
G | (800,000.00) | 160,000.00 |
Calculate the present value of cash inflows associated with each project.
Select the optimal group of project, keeping in mind that unused funds are costly.
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