Question
You are subjected to capital rationing and have an investment budget of $500,000. You have four good projects. Project A costs $300,000 to pursue and
You are subjected to capital rationing and have an investment budget of $500,000. You have four good projects. Project A costs $300,000 to pursue and has NPV of $40,000, PI of 1.2, and IRR of 10%. Project B costs $350,000 to pursue and has NPV of $60,000, PI of 1.3, and IRR of 12%. Project C costs $200,000 and has NPV of $35,000, PI of 1.25, and IRR of 13%. Project D costs $150,000 and has NPV of $10,000, PI of 1.5, and IRR of 20%. Explain which combination of projects you would be comparing to each other and why. Of the 2 combinations being compared, explain which combination you would pursue and why based on the 2 projects combined Cost. NPV, PI and IRR. Please explain with calculations how you combined the 2 projects Cost. NPV, PI and IRR to see which combination to choose and why it is the best choice.
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