Constraints on borrowing. Runway Fashions, Inc. is considering the following potential projects for the company, but has only $1,000,000 in the capital budget. Which projects should it choose? Click on the Icon in order to copy its content into a spreadsheet. Project Winter coats Spring dresses Fall suits Cost NPV IRR S750,000 $95,000 13% $500,000 $500,000 $45,000 9% $55,000 11% Summer sandals $400,000 $60,000 14% Which projects should it choose? (Select the best responses.) O A. Winter coats only. O B. Summer sandals and fall suits. OC. Winter coats and summer sandals. O D. Spring dresses and fall suits. O E. Spring dresses and summer sandals.
Constraints on borrowing. Runway Fashions, Inc. is considering the following potential projects for the company, but has only $1,000,000 in the capital budget. Which projects should it choose? Click on the Icon in order to copy its content into a spreadsheet. Project Winter coats Spring dresses Fall suits Cost NPV IRR S750,000 $95,000 13% $500,000 $500,000 $45,000 9% $55,000 11% Summer sandals $400,000 $60,000 14% Which projects should it choose? (Select the best responses.) O A. Winter coats only. O B. Summer sandals and fall suits. OC. Winter coats and summer sandals. O D. Spring dresses and fall suits. O E. Spring dresses and summer sandals.
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
Problem 1PS
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Chapter 11, Question 2
Transcribed Image Text:**Constraints on Borrowing**
Runway Fashions, Inc. is evaluating several potential projects but has a capital budget constraint of $1,000,000. The company needs to decide which projects to undertake based on this limitation.
**Project Options**
| Project | Cost | NPV | IRR |
|------------------|----------|--------|------|
| Winter coats | $750,000 | $95,000 | 13% |
| Spring dresses | $500,000 | $45,000 | 9% |
| Fall suits | $500,000 | $55,000 | 11% |
| Summer sandals | $400,000 | $60,000 | 14% |
**Decision Options**
Which projects should Runway Fashions, Inc. choose? (Select the best responses.)
- A. Winter coats only.
- B. Summer sandals and fall suits.
- C. Winter coats and summer sandals.
- D. Spring dresses and fall suits.
- E. Spring dresses and summer sandals.
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