The Smooth Construction Company is planning to invest in several of eight (8) projects. Unfortunately, it...
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The Smooth Construction Company is planning to invest in several of eight (8) projects. Unfortunately, it faces a range of constraints such as budgetary, number of projects that it can supervise, and the relationship among projects (contingent and/or duplicative). The Company is seeking your assistance in selecting the projects that will maximize its Net Present Worth given different sets of constraints. All projects have the same lifespan. Projects A B C D E F G H Initial Cost 250,000 225,000 275,000 320,000 340,000 390,000 410,000 430,000 MARR = 10% NPW 50,000 45,000 55,000 75,000 85,000 80,000 95,000 110,000 a) Budget = $2,000,000 b) Investing in project C is contingent on investing in F, G and H. c) Investing in project C is contingent on investing in either D or H. d) Projects A and E are mutually exclusive. Select at most one (1) project. e) Use the NPW decision criterion to determine the "best" feasible bundle of projects. 20. 21. 22. The best investment bundle consists of projects The NPW ($) of the best investment bundle is The total cost ($) of the best investment bundle is 23. Which project in the best bundle is ranked second highest? The Smooth Construction Company is planning to invest in several of eight (8) projects. Unfortunately, it faces a range of constraints such as budgetary, number of projects that it can supervise, and the relationship among projects (contingent and/or duplicative). The Company is seeking your assistance in selecting the projects that will maximize its Net Present Worth given different sets of constraints. All projects have the same lifespan. Projects A B C D E F G H Initial Cost 250,000 225,000 275,000 320,000 340,000 390,000 410,000 430,000 MARR = 10% NPW 50,000 45,000 55,000 75,000 85,000 80,000 95,000 110,000 a) Budget = $2,000,000 b) Investing in project C is contingent on investing in F, G and H. c) Investing in project C is contingent on investing in either D or H. d) Projects A and E are mutually exclusive. Select at most one (1) project. e) Use the NPW decision criterion to determine the "best" feasible bundle of projects. 20. 21. 22. The best investment bundle consists of projects The NPW ($) of the best investment bundle is The total cost ($) of the best investment bundle is 23. Which project in the best bundle is ranked second highest?
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ANSWER a The best investment bundle consists of projects A B C D F G and H b The NPW of the best inv... View the full answer
Related Book For
Advanced Accounting
ISBN: 978-0538480284
11th edition
Authors: Paul M. Fischer, William J. Tayler, Rita H. Cheng
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