Question
Short OFunds has R15 million available for investment in the forthcoming period. The firms cost of capital is 20%. Capital will be freely available in
Short OFunds has R15 million available for investment in the forthcoming period. The firms cost of capital is 20%. Capital will be freely available in the future. Details of six projects under consideration are given below. All projects are independent and divisible.
| Project | Cost(R 000) | Present value of inflows at 20% (R000) |
|---|---|---|
| a | 6200 | 8701 |
| b | 7700 | 10318 |
| c | 4620 | 7515 |
| d | 6930 | 9086 |
| e | 2310 | 3500 |
| f | 3080 | 4743 |
Which projects should be undertaken? Show all relevant calculations and what NPV will result from the projects selected.
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Cases In Healthcare Finance
Authors: Louis C. Gapenski
2nd Edition
1567932002, 978-1567932003
