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Analyzing the given investment options

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A firm has the following investment opportunities:

Project A Project B Project C
Investment $150,000 $125,000 $100,000
NPV $30,000 $20,000 $25,000
IRR 14% 11% 13%

If the cost of capital is 10% and the capital budget is limited to $280,000, which project(s) should the firm undertake?

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Solution Summary

Solution selects the suitable project/s subject to the given budget constraint.

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We observe that
1. NPV of each project is a positive value.
2. IRR of each project is higher than cost of capital i.e. 10%.

So, all the three projects can be ...

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  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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