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You have a capital constraint for one period of R1 million, your cost of capital is 12%, you could invest surplus funds at 10%, and
You have a capital constraint for one period of R1 million, your cost of capital is 12%, you could invest surplus funds at 10%, and you are analysing the following potential indivisible projects:
Project Cost NPV@12%
A R600 000 R50 000
B R500 000 R25 000
C R400 000 -R1 000
D R450 000 R45 000
E R1 000 000 R48 000
(a) Which project(s) should you invest in? Explain how you came to your decision.
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