Constraints on

borrowing.

Runway Fashions, Inc. is considering the following potential projects for the company, but has only

$1,000,000

in the capital budget. Which projects should it choose?

Project	Cost	NPV	IRR
Winter coats	$750,000	$95,000	13%
Spring dresses	$500,000	$45,000	9%
Fall suits	$500,000	$55,000	11%
Summer sandals	$400,000	$60,000	14%

Which projects should it choose? (Select the best responses.)

A.

Winter coats only.

B.

Summer sandals and fall suits.

C.

Winter coats and summer sandals.

D.

Spring dresses and summer sandals.

E.

Spring dresses and fall suits.