Question: 6. Consider the set of projects under consideration for Sox Corp. As the Manager of Finance for Sox Corp., you have been given a budget
6. Consider the set of projects under consideration for Sox Corp. As the Manager of Finance for Sox Corp., you have been given a budget of $1,374,500 for capital projects. Which projects will NOT be undertaken based on the numbers provided below by your analysts? Check all that are rejected.
| Project | Cost | NPV |
| A | 410,000 | 18,500 |
| B | 125,000 | 14,500 |
| C | 64,500 | 18,000 |
| D | 600,500 | 23,500 |
| E | 785,000 | 40,000 |
| F | 400,000 | 32,000 |
7. Given the advantages and disadvantages outlined below, which decision criteria (A, B, C, or D) is Net Present Value (NPV)?
| Criteria | Advantage | Disadvantage |
| A | Easy to understand. Quick computation. May be best option for small-budget projects. | Does not account for all cash flows. Does not account for time value of money. |
| B | Accounts for all cash flows and provides same accept/reject decision as NPV for conventional cash flows on independent projects. | Cash flows may generate multiple results. Cannot be used to rank mutually exclusive projects. High results may not be best. |
| C | Accounts for all cash flows as well as the time value of money. | My require a tweak in order to make appropriate choices under budget constraints. |
| D | Accounts for all cash flows as well as the time value of money. Can be used under budget constraints. | In isolation may lead to improper ordering of projects. |
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