Your firm has $4,000,000 available for investment in capital projects.Which combination of projects is the best,given this budget constraint? $$\begin{array} { | c | c | c | }
\hline \text { Project } & \text { Initial Investment } & \text { NPV } \
\hline \text { A } & \$ 1,000,000 & \$ 150,000 \
\hline \text { B } & \$ 500,000 & \$ 200,000 \
\hline \text { C } & \$ 1,500,000 & \$ 175,000 \
\hline \text { D } & \$ 1,750,000 & \$ 135,000 \
\hline
\end{array}$$
A)A,B,C
B)A,B,D
C)A,C,D
D)B,C,D

Question

Your firm has $4,000,000 available for investment in capital projects.Which combination of projects is the best,given this budget constraint? $$\begin{array} { | c | c | c | } 
\hline \text { Project } & \text { Initial Investment } & \text { NPV } \
\hline \text { A } & \$ 1,000,000 & \$ 150,000 \
\hline \text { B } & \$ 500,000 & \$ 200,000 \
\hline \text { C } & \$ 1,500,000 & \$ 175,000 \
\hline \text { D } & \$ 1,750,000 & \$ 135,000 \
\hline
\end{array}$$
A)A,B,C
B)A,B,D
C)A,C,D
D)B,C,D

Quizplus · Accepted Answer

Selecting projects A, B, and C maximizes the total NPV within the budget constraint, offering a combined investment of $3,000,000 and a total NPV of $525,000.

Your Firm Has $4,000,000 Available for Investment in Capital Projects