You have a capital constraint for one period of R1 million, your cost of capital is 12%,

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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 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

(b) Should you invest any surplus funds when making your choice of project(s)? Explain your answer.

Related Book For answer-question

Global Marketing Contemporary Theory Practice and Cases

ISBN: 978-0078029271

1st edition

Authors: Ilan Alon, Eugene Jaffe

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Posted Date: Jan 09, 2021 06:42 PM

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You have a capital constraint for one period of R1 million, your cost of capital is 12%,

Question:

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The objective of this question is choosing a project that ensure the highest return Project C cannot ... View the full answer

Global Marketing Contemporary Theory Practice and Cases

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