8. A company has a total budget for new projects of $100,000 and four potential projects...

 

Transcribed Image Text:

8. A company has a total budget for new projects of $100,000 and four potential projects it can pursue. The projects are not mutually exclusive, except that each costs $50,000 to pursue so the company can only choose 2. Project A has NPV of $20,000, IRR of 10%, and profitability index of 1.5. Project B has NPV of $25,000, IRR of 8%, and profitability index of 1.2. Project C has NPV of $10,000, IRR of 20%, and profitability index of 2. Project D has NPV of $30,000, IRR of 12%, and profitability index of 1.3. Which projects should the company pursue and why? 8. A company has a total budget for new projects of $100,000 and four potential projects it can pursue. The projects are not mutually exclusive, except that each costs $50,000 to pursue so the company can only choose 2. Project A has NPV of $20,000, IRR of 10%, and profitability index of 1.5. Project B has NPV of $25,000, IRR of 8%, and profitability index of 1.2. Project C has NPV of $10,000, IRR of 20%, and profitability index of 2. Project D has NPV of $30,000, IRR of 12%, and profitability index of 1.3. Which projects should the company pursue and why?

Answer rating: 100% (QA)

To determine which projects the company should pursue we need to consider their respective NPVs IRRs ... View the full answer