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Consider the followinglist of projects(data in millions): Alternative Investment PW(15%) PW Payback 1 $100 $573 $1642 12 2 $303 $283 $132 7 3 $317 $647
- Consider the followinglist of projects(data in millions):
| Alternative | Investment | PW(15%) |
| Payback |
| 1 | $100 | $573 | $1642 | 12 |
| 2 | $303 | $283 | $132 | 7 |
| 3 | $317 | $647 | $660 | 5 |
| 4 | $235 | $665 | $941 | 4 |
PW
Assume that projects2 and 3 are mutually exclusive and that thereis a $600 million budget.
Find the mean and varianceof the present worth for all feasibleportfolios. Construct an efficiency frontier.
- What does it tell you?
- Use threshold analysis with a minimum present-worth standard of $0 and maximum standard deviation of $2
- billion, and a maximumpayback of 10 (assume that the paybackperiod for a portfolio is the maximum
- payback period of any project in the portfolio). What projects shouldbe considered?
- Assume that the criteriaof present worth,standard deviation, and payback periodare ordered as listed, with
- ideal values of $2 billion, $125 million respectively. Provide a score for each portfolio and select the best one.
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