Question: Suppose that your values for the three projects, not including the upfront $1,500,000 investment cost, are: Project A = $500,000; Project B =$750,000 and Project

  • Suppose that your values for the three projects, not including the upfront $1,500,000 investment cost, are: 
  • Project A = $500,000; 
  • Project B =$750,000 and 
  • Project C = $900,000. 

  • What are the explicit (actual) and implicit (net value of best alternative, or "opportunity") costs for each of the three projects?

  • Which one should you invest in to maximize your returns? Think carefully, and assume that we live in a free society where you don't have to do anything you don't want to.

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