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The firm you are working for has a hard ration in place that limits their spending on new projects to $400,000. Given the below options,
The firm you are working for has a hard ration in place that limits their spending on new projects to $400,000. Given the below options, which projects should the firm choose? Assume the below choices are the only options and that uninvested capital gets no return. | ||||||||||
Investment | NPV | |||||||||
Project 1 | $250,000 | $35,000 | ||||||||
Project 2 | $200,000 | $24,000 | ||||||||
Project 3 | $150,000 | $21,000 | ||||||||
Project 4 | $400,000 | $44,000 | ||||||||
A | Project 1 and 2 only | |||||||||
B | Project 1 and 3 only | |||||||||
C | Project 2 and 3 only | |||||||||
E | Project 4 only | |||||||||
F | Projects 1, 2, 3, and 4 | |||||||||
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