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MNO Inc. has $850,000 available for capital projects. The company is considering seven potential projects. The opportunity cost of capital is 10%. Project Required Investment

MNO Inc. has $850,000 available for capital projects. The company is considering seven potential projects. The opportunity cost of capital is 10%.

Project

Required Investment ($thousands)

NPV ($thousands)

IRR (%)

A

300

55

13.2

B

150

10

9.2

C

250

40

11.7

D

100

5

8.0

E

200

20

10.5

F

300

45

12.8

G

350

50

14.0

Requirements:

  1. Identify the projects to accept to stay within the $850,000 budget.
  2. Compute the total NPV for the selected projects.
  3. Evaluate the opportunity cost of capital in terms of market value.

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