Exhibit 16-2 The following lists possible capital investments that a business might pursue.
Refer to Exhibit 16-2.How many projects would the firm invest in if the interest rate is 7 percent?

Question

Exhibit 16-2 The following lists possible capital investments that a business might pursue.
 Refer to Exhibit 16-2.How many projects would the firm invest in if the interest rate is 7 percent?

Quizplus · Accepted Answer

The firm would invest in projects A and C since they both have positive net present values at a 7 percent interest rate. Project B has a negative net present value at a 7 percent interest rate, so it would not be a wise investment. Project D has a positive net present value, but it has a lower priority than projects A and C because it has a lower profitability index. Therefore, the best choice(s) would be to invest in projects A and C.

Exhibit 16-2 the Following Lists Possible Capital Investments That a Business