Use the following information to answer questions 2 and 3.
Project A: NPV = +$50 billion; IRR = 10%; Upfront Cost = $100 billion

Project B: NPV =-$20 billion; IRR = 5%; Upfront Cost = $1 billion Projett C: NPV = +$10 billion; 1RR = 14%; Upfront Cost = $3 billion Project D: NPV = +$100 billion; IRR = 8%; Upfront Cost = $700 billion Each project has a traditional pattern of cash Rows and a single internal rate of return.

Q2. If the firm is capital constrained and all four projects are scalable, which project should it choose?

Q3. If all four projects have the same discount rate r, what is a possible value for that discount rate?

Answer rating: 100% (QA)

Q2 The project with the highest NPV per upfront cost should be picked if the company has a limited a... View the full answer