A firm must choose from six capital budgeting proposals outlined below. The firm is subject to capital rationing and has a capital budget of P1,000,000; the firm's cost of capital is 15 percent. Project Initial investment P200,000 400,000 250,000 200,000 150,000 400 000 IRR 19% 17 16 12 20 NPV P100,000 20,000 60,000 -5,000 50,000 150 000 2 3 4 15

A firm must choose from six capital budgeting proposals outlined below. The firm is subject to capital rationing and has a capital budget of P1,000,000; the firm's cost of capital is 15 percent. Project Initial investment P200,000 400,000 250,000 200,000 150,000 400 000 IRR 19% 17 16 12 20 NPV P100,000 20,000 60,000 -5,000 50,000 150 000 2 3 4 15

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter9: Capital Budgeting Techniques

Section: Chapter Questions

Problem 3PROB

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Would you rather have $7,500 today or at the end of 20 years after it has been invested at 15%? Explain your answer. The following are independent situations. For each capital budgeting project, indicate whether management should accept or reject the project and list a brief reason why.
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