eBook Basic Net Present Value Analysis, Competing Projects Kildare Medical Center, a for-profit hospital, has three investment opportunities: (1) adding a wing for in-patient treatment of substance abuse, (2) adding a pathology laboratory, and (3) expanding the outpatient surgery wing. The initial investments and the net present value for the three alternatives are as follows: Investment NPV Substance Abuse $1,500,000 324,500 Laboratory $500,000 140,000 Outpatient Surgery $1,000,000 135,000 Although the hospital would like to invest in all three alternatives, only $1.5 million is available. Required: 1. Rank the projects on the basis of NPV, and allocate the funds in order of this ranking. If a blank requires an entry of zero, it can be left blank or answered with a "0". Ranking Project Substance abuse wing Laboratory Outpatient surgery wing What project or projects were selected? Allocation What is the total NPV realized by the medical center using this approach? 2. CONCEPTUAL CONNECTION: Assume that the size of the lot on which the hospital is located makes the substance abuse wing and the outpatient surgery wing mutually exclusive. With unlimited capital, which of those two projects would be chosen?