Question
Project 1 IRR on overall investment = 19% First cost = 100000 Project 2 First cost = 175000 IRR on overall investment = 15% IRR
Project 1
IRR on overall investment = 19%
First cost = 100000
Project 2
First cost = 175000
IRR on overall investment = 15%
IRR on increments of investment compared with projects 1- 9%
Project 3 First cost = 200000
IRR on overall investment = 18%
IRR on increments of investment compared with projects
1- 17%
2- 23%
Project 4
First cost = 250000
IRR on overall investment = 16%
IRR on increments of investment compared with projects
1- 12% 2- 17% 3- 13%
Project 5
First cost = 300000
IRR on overall investment = 17%
IRR on increments of investment compared with projects
1- 14% 2- 11% 3- 17% 4- 16%
The data can be interpreted in the following way: The IRR on the incremental investment between project 5 and project 4 is 16%. If all projects are independent and the company has at least $1 025 000 to invest, which projects should be undertaken if the MARR is 16%?
options:
5 only
1, 3, 4, and 5
3 and 5
3 only
3, 4 and 5
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