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A company has £5 million available and three possible projects, all of which are divisible: Project Investment at t0 NPV S £1.75m £0.56m T £2.50m £0.90m U £3.75m £1.30m   What percentage of project T should be undertaken in order to maximise shareholder wealth

A company has £5 million available and three possible projects, all of which are divisible: Project Investment at t0 NPV S £1.75m £0.56m T £2.50m £0.90m U £3.75m £1.30m   What percentage of project T should be undertaken in order to maximise shareholder wealth

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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3.  A company has £5 million available and three possible projects, all of which are divisible:

Project

Investment at t0

NPV

S

£1.75m

£0.56m

T

£2.50m

£0.90m

U

£3.75m

£1.30m

 

What percentage of project T should be undertaken in order to maximise shareholder wealth?

A  0%

B  50%

C  63%

D  100%

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