Question
PQR Corporation has $1,100,000 to allocate towards new projects. Evaluate the following 7 projects and determine which should be accepted to stay within the budget
PQR Corporation has $1,100,000 to allocate towards new projects. Evaluate the following 7 projects and determine which should be accepted to stay within the budget while maximizing NPV. The opportunity cost of capital is 10 percent.
Project | Investment ($thousands) | NPV ($thousands) | IRR (%) |
1 | 350 | 60 | 13.5 |
2 | 300 | 45 | 12.0 |
3 | 200 | 25 | 11.5 |
4 | 100 | -5 | 9.0 |
5 | 400 | 70 | 14.0 |
6 | 250 | 35 | 10.5 |
7 | 500 | 80 | 15.0 |
Requirements:
- Select the projects to be undertaken.
- Compute the total investment for the selected projects.
- Calculate the total NPV of the selected projects.
- Analyze the impact of the opportunity cost of capital.
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Introduction To Health Care Management
Authors: Sharon B. Buchbinder, Nancy H. Shanks
3rd Edition
128408101X, 9781284081015
