Question
Smythe Company is considering the following 5 capital budgeting projects. The cost of capital for all projects is 14%. Project Initial Cost NPV IRR PI
Smythe Company is considering the following 5 capital budgeting projects. The cost of capital for all projects is 14%.
| Project | Initial Cost | NPV | IRR | PI |
| A | $1,000,000 | ($650,000) | 10% | 0.96 |
| B | $400,000 | $113,000 | 18% | 1.33 |
| C | $10,000 | $2,500 | 21% | 1.52 |
| D | $2,500,000 | $20 | 15% | 1.01 |
| E | $8,350,000 | $515,000 | 17% | 1.44 |
If the projects areMUTUALLY EXCLUSIVE, which project(s) should Smythe accept? (Note: it is possible that more than one project should be accepted. You must check all that apply to receive credit - this is an all or nothing question. That is, if they should accept projects A and B and you check only A or only B or if you also check C, your answer will be marked wrong).
If the projects are independent, which one should I choose?
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Mechanics of Materials
Authors: Russell C. Hibbeler
10th edition
134319656, 978-0134319650
