Problem B: A firm must choose from six capital budgeting proposals outlined below.  The firm is subject to capital rationing and has a capital budget of Php 1,000,000; the firm's cost of capital is 15%. Project          Initial Investment(Php)       IRR        NPV (Php)   _______          __________________            ___                 ______         1                    200,000                    19%               100,000     2                   400,000                      17%                20,000     3                  250,000                      16%                 60,000     4                  200,000                      12%                  (5,000)     5                  150,000                     20%                  50,000    6                    400,000                    14.5%              150,000   *Using Internal Rate of Return approach of ranking projects, which projects should the firm accept?

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
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Problem B:

A firm must choose from six capital budgeting proposals outlined below.  The firm is subject to capital rationing and has a capital budget of Php 1,000,000; the firm's cost of capital is 15%.

Project          Initial Investment(Php)       IRR        NPV (Php) 

 _______          __________________            ___                 ______         1                    200,000                    19%               100,000

    2                   400,000                      17%                20,000

    3                  250,000                      16%                 60,000

    4                  200,000                      12%                  (5,000)

    5                  150,000                     20%                  50,000

   6                    400,000                    14.5%              150,000

 

*Using Internal Rate of Return approach of ranking projects, which projects should the firm accept?

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