Question
You are in charge of a division subject to capital rationing; the division has 4 indivisible projects available, detailed as follows: Project Initial Outlay IRR
You are in charge of a division subject to capital rationing; the division has 4 indivisible projects available, detailed as follows:
| Project | Initial Outlay | IRR | NPV |
| 1 | $ 300,000 | 22% | $ 260,000 |
| 2 | $ 200,000 | 24% | $ 180,000 |
| 3 | $ 500,000 | 18% | $ 350,000 |
| 4 | $ 300,000 | 10% | $ 90,000 |
If you must select projects subject to a budget constraint of one million dollars, which set of projects should be accepted so as to maximize the firm value?
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Accounting What the Numbers Mean
Authors: David H. Marshall, Wayne W. McManus, Daniel F. Viele,
9th Edition
978-0-07-76261, 0-07-762611-7, 9780078025297, 978-0073527062
