Question
Assume you are a Finance Manager of a corporation and you have 5 projects on hand to review. The initial investments and the NPVs for
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Assume you are a Finance Manager of a corporation and you have 5 projects on hand to review. The initial investments and the NPVs for these 5 projects are :
Project 1 : $100,000 & $30,000;
Project 2 : $80,000 & $25,000;
Project 3 : $60,000 & $15,000;
Project 4 : $40,000 & $17,000;
Project 5 : $105,000 & $40,000.
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Explain Profitability Index (PI). Which of the above projects would you prefer if you have limited funds ?
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Suppose you have $110,000 on hand for project(s), which project(s) would you choose ? Explain & justify your choice(s).
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Based on your choice(s) in part b, will you have any money left ? Does it imply something good, or bad ? Please comment.
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Essential Mathematics For Economic Analysis
Authors: Knut Sydsaeter, Peter Hammond, Arne Strom
4th Edition
0273760688, 9780273760689
