In considering investments in large capital projects, a company is deciding in which of the following projects
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In considering investments in large capital projects, a company is deciding in which of the following projects it will invest.
| (Values in the $Millions) | Project A | Project B | Project C |
| Capital Required (in year 0) | 80 | 100 | 120 |
| After-tax yearly cash flow (yr. 1-10) | 11 | 14 | 16 |
The company can always invest its money in long-term bonds that currently yield 5.5% p.a. (after tax). In which, if any, of the projects, should the company invest if the capital ceiling for investment is $250 million and a project life of 10 years is assumed? Would you argue to raise the investment ceiling?
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