The following table lists the results of a capital budgeting analysis for seven projects. The firm uses a 12.50% required rate of return for all
The following table lists the results of a capital budgeting analysis for seven projects. The firm uses a 12.50% required rate of return for all of them. If the projects are all mutually exclusive and the firm has enough resources to finance simultaneously no more than two projects. Which project(s) should the firm choose? Why?
| PROJECT | IRR | PI | NPV |
|---|---|---|---|
| A | 15.62% | 1.65 | $547 |
| B | 13.87% | 1.66 | $412 |
| C | 12.76% | 1.04 | $2419 |
| D | 12.25% | 0.998 | -$1313 |
| E | 13.08% | 1.07 | $365 |
| F | 17.25% | 1.78 | $405 |
| G | 12.55% | 1.01 | $105 |
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Authors: CFP Board
2nd Edition
1119094968, 978-1119094968
