# Calculating the amount that can be raised and invested

If XYZ Corp. can undertake the following projects:

Project 1:

Required investment: $10 million

Expected rate of return: 12%

Project 2:

Required investment: $2 million

Expected rate of return: 15%

Project 3:

Required investment: $5 million

Expected rate of return: 10%

Project 4:

Required investment: $8 million

Expected rate of return: 17%

It can raise up to $10 million at a cost of capital of 10%

From $10 to $20 million at a cost of capital of 15%

Over $20 million, its cost of capital is 20%.

What is the amount of money (in millions) that will be raised and invested?

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#### Solution Preview

Let us consider the investment with highest return i.e. Project 4.

Total investment required=$8 million

Expected rate of return=17%

This can be financed by the capital with 10% cost.

Total Capital raised= $8 ...

#### Solution Summary

The solution describes the steps to calculate the amount that can be raised and invested in line with given proposals.