Your firm has $2,000,000 available for investment in capital projects.Which combination of projects is the best,given this budget constraint? $$\begin{array} { | c | c | c | }
\hline \text { Project } & \text { Initial Investment } & \text { NPV } \
\hline \text { A } & \$ 750,000 & \$ 100,000 \
\hline \text { B } & \$ 1,500,000 & \$ 125,000 \
\hline \text { C } & \$ 500,000 & \$ 75,000 \
\hline \text { D } & \$ 500,000 & \$ 55,000 \
\hline
\end{array}$$

Question

Your firm has $2,000,000 available for investment in capital projects.Which combination of projects is the best,given this budget constraint? $$\begin{array} { | c | c | c | } 
\hline \text { Project } & \text { Initial Investment } & \text { NPV } \
\hline \text { A } & \$ 750,000 & \$ 100,000 \
\hline \text { B } & \$ 1,500,000 & \$ 125,000 \
\hline \text { C } & \$ 500,000 & \$ 75,000 \
\hline \text { D } & \$ 500,000 & \$ 55,000 \
\hline
\end{array}$$

Quizplus · Accepted Answer

The best combination of projects within the $2,000,000 budget that maximizes the total NPV is A, C, and D, with a total investment of $1,750,000 and a combined NPV of $230,000.

Your Firm Has $2,000,000 Available for Investment in Capital Projects