A firm has a budget constraint of $35 million to invest in new projects.Given the following information on four independent projects,what is the loss to the firm from the capital rationing constraint?

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Project's NPV = -CF₀ + annual CF*PVAF(k,N) Project Alpha's NPV = $3,065,782; project Bravo's NPV = $3,479,485; project Ceta's NPV = $2,781,652; and project Delta's NPV = $1,497,015.The total NPV of projects Alpha and Bravo combined = $6,545,267,is the highest total NPV among the other possible combinations within the budget constraint.The loss to the company is the total NPVs of the foregone projects Ceta and Delta = $2,781,652 + $1,497,015 = $4,278,667

A Firm Has a Budget Constraint of $35 Million to Invest