In the capital budgeting model in Figure 14.40, investment 4 has the largest ratio of NPV to

Question:

In the model in Figure 14.40, investment 4 has the largest ratio of NPV to cash requirement, but it is not selected in the optimal solution. How much NPV is lost if Tatham is forced to select investment 4? Answer by solving a suitably modified model.

Capital Budgeting
Capital budgeting is a practice or method of analyzing investment decisions in capital expenditure, which is incurred at a point of time but benefits are yielded in future usually after one year or more, and incurred to obtain or improve the...