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

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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Using the NPV index approach to ranking projects, which projects should the firm accept?

A. 1, 6, 5 and 3
B. 1, 2, 3, and 5
C. 2, 3, 4, and 6
D. 1, 3, 4, and 6
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
NPV
P100,000
20,000
60,000
-5,000
50,000
150,000
3.
4
20
6.
15
Transcribed Image Text: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 NPV P100,000 20,000 60,000 -5,000 50,000 150,000 3. 4 20 6. 15
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