As a top manager, you must decide firm which of the proposed projects should be accepted for the upcoming year since only $6 million is available for the next years's capital budget. What is the total NPV of the projects that should be accepted?

Question

Quizplus · Accepted Answer

According to the information provided, there is a limit of $6 million available for the upcoming year's capital budget. Among the proposed projects, only three combinations of projects do not exceed this limit, which are A, B, and F; F, B, and D; and E, F, and D.

To determine the best choice, we need to look at the total NPV of each combination. Among the three combinations that do not exceed the budget limit, the combination with the highest total NPV is F, B, and D with a total NPV of $1.72. Therefore, the best choice is B.

As a Top Manager, You Must Decide Firm Which of the Proposed