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
Related questions
Question
Orchid Biotech Company is evaluating several different development projects for experimental drugs. Although the cash flows are difficult to
|
Project Number
|
Initial Capital ($)
|
Number of Research Scientists
|
|
|
I
|
10
|
2
|
10.1
|
|
II
|
15
|
3
|
19.0
|
|
III
|
15
|
4
|
22.0
|
|
IV
|
20
|
3
|
25.0
|
|
V
|
30
|
12
|
60.2
|
Given a wide variety of staffing needs, the company has also estimated the number of research scientists required for each development project (all cost values are given in millions of dollars).
Suppose that Orchid has a total capital budget of $60 million. How should it prioritize these projects?
The profitability index for Project I is ___________________
(Round to two decimal places.)
(Round to two decimal places.)
The profitability index for Project II is __________________________
(Round to two decimal places.)
(Round to two decimal places.)
The profitability index for Project III is
(Round to two decimal places.)
The profitability index for Project IV is __________________________
(Round to two decimal places.)
(Round to two decimal places.)
The profitability index for Project V is __________________________
(Round to two decimal places.)
(Round to two decimal places.)
Based on the profitability index, how should Orchid Biotech Company prioritize these projects? (See image I sent with this)
(1) Selected 1st _____________________
(2) Selected 2nd _____________________
(3) Selected 3rd _____________________
Suppose that Orchid currently has 12 research scientists and does not anticipate being able to hire more in the near future. How should Orchid prioritize these projects?
The NPV/headcount ratio for Project I is ___________________
(Round to one decimal place.)
(Round to one decimal place.)
The NPV/headcount ratio for Project II is ______________________
(Round to one decimal place.)
(Round to one decimal place.)
The NPV/headcount ratio for Project III is ______________________
(Round to one decimal place.)
(Round to one decimal place.)
The NPV/headcount ratio for Project IV is __________________
(Round to one decimal place.)
(Round to one decimal place.)
The NPV/headcount atio for Project V is ___________________
(Round to one decimal place.)
(Round to one decimal place.)
Based on the NPV/headcount ratio, how should Orchid Biotech Company prioritize these projects? (See image I sent with this)
(4) Selected first _________________________________
(5) Selected 2nd ________________________________
(6) Selected 3rd ________________________________
(7) Selected fourth ________________________________
![### Project Data for Research Allocation and Evaluation
#### Project Details
| Project Number | Initial Capital ($) | Number of Research Scientists | NPV ($) |
|----------------|----------------------|-------------------------------|----------|
| I | 10 | 2 | 10.1 |
| II | 15 | 3 | 19.0 |
| III | 15 | 4 | 22.0 |
| IV | 20 | 3 | 25.0 |
| V | 30 | 12 | 60.2 |
#### Multiple Choice Questions
**(1)**
- [ ] II
- [ ] III
- [ ] V
- [ ] I
- [ ] None
- [ ] IV
**(2)**
- [ ] III
- [ ] IV
- [ ] V
- [ ] I
- [ ] None
- [ ] II
**(3)**
- [ ] None
- [ ] V
- [ ] I
- [ ] III
- [ ] IV
- [ ] II
**(4)**
- [ ] V
- [ ] I
- [ ] None
- [ ] II
- [ ] IV
- [ ] III
**(5)**
- [ ] V
- [ ] None
- [ ] II
- [ ] I
- [ ] IV
- [ ] III
**(6)**
- [ ] II
- [ ] None
- [ ] I
- [ ] IV
- [ ] III
- [ ] V
**(7)**
- [ ] V
- [ ] I
- [ ] III
- [ ] IV
- [ ] None
- [ ] II](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc0d30fa4-6690-40d7-874d-b36de1a394a2%2Fa6541d71-496e-4f81-a966-7218b8558548%2Fj7o0ygy.jpeg&w=3840&q=75)
Transcribed Image Text:### Project Data for Research Allocation and Evaluation
#### Project Details
| Project Number | Initial Capital ($) | Number of Research Scientists | NPV ($) |
|----------------|----------------------|-------------------------------|----------|
| I | 10 | 2 | 10.1 |
| II | 15 | 3 | 19.0 |
| III | 15 | 4 | 22.0 |
| IV | 20 | 3 | 25.0 |
| V | 30 | 12 | 60.2 |
#### Multiple Choice Questions
**(1)**
- [ ] II
- [ ] III
- [ ] V
- [ ] I
- [ ] None
- [ ] IV
**(2)**
- [ ] III
- [ ] IV
- [ ] V
- [ ] I
- [ ] None
- [ ] II
**(3)**
- [ ] None
- [ ] V
- [ ] I
- [ ] III
- [ ] IV
- [ ] II
**(4)**
- [ ] V
- [ ] I
- [ ] None
- [ ] II
- [ ] IV
- [ ] III
**(5)**
- [ ] V
- [ ] None
- [ ] II
- [ ] I
- [ ] IV
- [ ] III
**(6)**
- [ ] II
- [ ] None
- [ ] I
- [ ] IV
- [ ] III
- [ ] V
**(7)**
- [ ] V
- [ ] I
- [ ] III
- [ ] IV
- [ ] None
- [ ] II
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