Question
Assume a two period perfect certainty world. A firm has the following investment opportunities: Project I1 X2 A $100,000 $120,000 B $150,000 $162,000 C $200,000
Assume a two period perfect certainty world. A firm has the following investment opportunities:
| Project | I1 | X2 |
| A | $100,000 | $120,000 |
| B | $150,000 | $162,000 |
| C | $200,000 | $226,000 |
| D | $300,000 | $345,000 |
The firm has an initial endowment of $500,000 and the market rate of return is 10%.
If the firm decides to undertake projects A, C and D, the firm's value is
| $528,181.82 | ||
| $537,272.73 | ||
| $545, 454.55 | ||
| $628,181.82 | ||
| None of the above because they do not have sufficient funds to invest in all 3 projects. |
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Focus On Personal Finance
Authors: Jack R. Kapoor, Les R. Dlabay Professor, Robert J. Hughes, Melissa Hart
5th Edition
0077861744, 978-0077861742
