Question
Finco is considering investing in five projects. Each requires a cash outflow at time 0 and yields an NPV as described in Table 82 (all
Finco is considering investing in five projects. Each requires a cash outflow at time 0 and yields an NPV as described in Table 82 (all dollars in millions). At time 0, $10 million is available for investment. Projects 1 and 2 are mutually exclusive (that is, Finco cannot undertake both). Similarly, projects 3 and 4 are mutually exclusive. Also, project 2 cannot be undertaken unless project 5 is undertaken. Use implicit enumeration to determine which projects should be undertaken to maximize NPV.
TABLE 82
Project | Time 0 Cash Outflow ($) | NPV ($) |
1 | 4 | 5 |
2 | 6 | 9 |
3 | 5 | 6 |
4 | 4 | 3 |
5 | 3 | 2 |
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Principles of Financial Accounting
Authors: Belverd E. Needles, Marian Powers
12th edition
978-1133940562, 1133940560, 978-1285608464, 1285608461, 1133939287, 978-0357693605, 978-1285607047, 128560704X, 978-1133939283
