Warehouse Ltd$.$ is a highly geared company that wishes to expand its operations. Six possible capital investments have been identified, but the company only has access to a total of $$620,000.$ The projects may not be postponed until a future period. After the projects end, it is unlikely that similar investment opportunities will occur.

Expected net cash flows $($including residual values$)$ are:

Project

Investment

$

NPV

$

A

$246,000$

$6,350$

B

$180,000$

$1,882$

C

$175,000$

$(2,596)$

D

$180,000$

$8,356$

E

$180,000$

$5,490$

F

$150,000$

$4,993$

Plan the best possible course of action to maximize NPV rank the projects accordingly.

Question $3$Answer

a$.$

E$,$D$,$F$,$C$,$B$,$A

b$.$

F$,$D$,$E$,$B$,$C$,$A

c$.$

D$,$F$,$E$,$A$,$B$,$C

d$.$

A$,$B$,$C$,$D$,$E$,$F