QUESTION $5$

The manager of a firm needs to decide among $7$ different projects. Each project has an $8-$year life. The company's budget this year is $$15,000.$ This amount needs to be allocated between the various projects. If the company's WACC is $8\%,$ which set of projects maximize NPV and do not exceed its budget? Please use solver to find the optimal set of projects.

SOLUTION

$\backslash$table$[[$WACC:$,8\%,,,,,,,],[$Budget:$,$$$15,000,,,,,,,],[$Year$,0,1,2,3,4,5,6,7],[$Project $1,($$$4,800),800,1250,800,800,850,750,750],[$Project $2,($$$2,700),400,550,800,550,550,550,550],[$Project $3,($$$4,200),1000,1500,1000,1000,480,480,200],[$Project $4,($$$2,200),475,475,475,420,420,350,350],[$Project $5,($$$6,500),1200,1200,1200,1200,1200,1200,1200],[$Project $6,($$$9,000),2000,2000,2000,1700,1700,1700,550],[$Project $7,($$$6,000),1400,1400,1200,1200,800,800,800]]$