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ohnson & Johnson is considering building a new factory in New Jersey. The factory will have a WACC of 6%. Due to space limitations, the

ohnson & Johnson is considering building a new factory in New Jersey. The factory will have a WACC of 6%. Due to space limitations, the factory can only make one product. Below is some financial information about the potential products the new factory could produce:

Product NPV IRR Payback Period
A 25 12% 3
B 75 8% 5
C 50 16% 4

Which (if any) of the products should be produced in the new factory?

Selected Answer: A.

Product A

Answers: A.

Product A

B.

Product B

C.

Product C

D.

None. The factory shouldn't be built

E.

Not enough information to decide

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