You must choose between the following projects.Project Alpha requires an initial investment of $10 million and provides an NPV of $4 million.Project Bravo requires an investment of $7 million and provides an NPV of $4 million.Project Charlie requires an investment of $8 million and provides an NPV of $4 million.Project Delta,contingent on project Alpha,requires an investment of $5 million and provides an NPV of $4.5 million.If you only have $15 million in available capital,which projects will you select?

Question

Quizplus · Accepted Answer

Total NPV of projects Alpha and Delta combined = $4,000,000 + $4,500,000 = $8,500,000,Is greater than the $8,000,000 total NPV of projects Bravo and Charlie combined.Given project Delta is contingent on project Alpha,It cannot be combined with project Bravo or Charlie alone.

You Must Choose Between the Following Projects