Recommend a solution for Unicorn Engineering Ltd in Example5.1 above if the investment projects were not divisible
Question:
Recommend a solution for Unicorn Engineering Ltd in Example5.1 above if the investment projects were not divisible (that is, it was not possible to undertake part of a project).
Assume the finance available was:
(a) £12 million
(b) £18 million
(c) £20 million.
Data from Example5.1
Unicorn Engineering Ltd is considering three possible investment projects: X, Y and Z. The expected pattern of cash flows for each project is as follows:
The business has a cost of capital of 12 per cent and the investment budget for the year that has just begun is restricted to £12 million. Each project is divisible (that is, it is possible to undertake part of a project if required).
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