You have a capital budget for the coming year of $5,000,000. You also have a list of
Question:
You have a capital budget for the coming year of $5,000,000. You also have a list of all potential positive NPV capital projects for the coming year:
Project A: Initial cost of $1,500,000 and NPV of $250,000
Project B: Initial cost of $2,000,000 and NPV of $200,000
Project C: Initial cost of $1,750,000 and NPV of $180,000
Project D: Initial cost of $750,000 and NPV of $60,000
Project E: Initial cost of $500,000 and NPV of $50,000
Project F: Initial cost of $900,000 and NPV of $25,000
Project G: Initial cost of $1,250,000 and NPV of $15,000 Which combination of projects is the best given the constraint that you can spend only up to $5,000,000?
Introduction to Managerial Accounting
ISBN: 978-1259105708
5th Canadian edition
Authors: Peter C. Brewer, Ray H. Garrison, Eric Noreen, Suresh Kalagnanam, Ganesh Vaidyanathan