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?© BrainMass Inc. brainmass.com June 4, 2020, 3:43 am ad1c9bdddf
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 ...
Solution selects the suitable project/s subject to the given budget constraint.