Table 10 -1. Capital Budgeting Choices

-Refer to Table 10 -1. Glen Write owns an engineering firm. He asked his employees for suggestions regarding equipment they thought the firm would need during the next year. They suggested the purchase of eight pieces of equipment. Glen calculated the net present value of each recommendation. Glen estimates that he will have no more than $150,000 to invest next year. Based on the projects chosen, how much will he actually invest?

Question

Table 10 -1. Capital Budgeting Choices
 
-Refer to Table 10 -1. Glen Write owns an engineering firm. He asked his employees for suggestions regarding equipment they thought the firm would need during the next year. They suggested the purchase of eight pieces of equipment. Glen calculated the net present value of each recommendation. Glen estimates that he will have no more than $150,000 to invest next year. Based on the projects chosen, how much will he actually invest?

Quizplus · Accepted Answer

Given the constraint of having no more than $150,000 to invest and the need to maximize the net present value (NPV) of the investments, Glen would choose the projects that fit within this budget while offering the highest NPV. Without the specific NPV values and costs of each piece of equipment, the correct answer is based on the information that he will invest an amount less than or equal to $150,000. $136,250 is the only option less than $150,000, making it the logical choice based on the given constraints.