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DEF Enterprises has $800,000 for capital expenditures and is evaluating six projects. The company's required rate of return is 9%. Project Alpha: Investment: $200,000, NPV:
DEF Enterprises has $800,000 for capital expenditures and is evaluating six projects. The company's required rate of return is 9%.
- Project Alpha: Investment: $200,000, NPV: $30,000, IRR: 11%
- Project Beta: Investment: $250,000, NPV: -$10,000, IRR: 7%
- Project Gamma: Investment: $150,000, NPV: $20,000, IRR: 10%
- Project Delta: Investment: $300,000, NPV: $40,000, IRR: 12%
- Project Epsilon: Investment: $100,000, NPV: $15,000, IRR: 9.5%
- Project Zeta: Investment: $200,000, NPV: $25,000, IRR: 10.8%
Requirements:
- Determine which projects to undertake without exceeding the budget.
- Compute the aggregate NPV of the chosen projects.
- Evaluate the opportunity cost in terms of market value.
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