Three projects are independent, and the company has only $500,000 to invest Project A requires an investment of $500,000 and has a net present value of $125,000 using the company's cost of capital. Project B requires an investment of $250,000 and has a net present value of $80,000 using the company's cost of capital. Project C requires an investment of $250,000 and has a net present value of $65,000 using the company's cost of capital. Which projects(s) should be accepted? O Because the projects are independent, more than one project can be accepted. Accept Projects A, B, and because they all have positive net present values. Sm O Because the projects are independent, more than one project can be accepted. Accept both Project B and Project C because their combined net present value is larger than Project A's net present value. O Because the projects are independent, only one project can be accepted. Accept Project A because it has the highest net present value. O Because the projects are independent, more than one project can be accepted. Accept Project A because it has the highest net present value.
Three projects are independent, and the company has only $500,000 to invest Project A requires an investment of $500,000 and has a net present value of $125,000 using the company's cost of capital. Project B requires an investment of $250,000 and has a net present value of $80,000 using the company's cost of capital. Project C requires an investment of $250,000 and has a net present value of $65,000 using the company's cost of capital. Which projects(s) should be accepted? O Because the projects are independent, more than one project can be accepted. Accept Projects A, B, and because they all have positive net present values. Sm O Because the projects are independent, more than one project can be accepted. Accept both Project B and Project C because their combined net present value is larger than Project A's net present value. O Because the projects are independent, only one project can be accepted. Accept Project A because it has the highest net present value. O Because the projects are independent, more than one project can be accepted. Accept Project A because it has the highest net present value.
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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Transcribed Image Text:Three projects are independent, and the company has only $500,000 to invest. Project A requires an investment of $500,000 and has a
net present value of $125,000 using the company's cost of capital. Project B requires an investment of $250,000 and has a net present
value of $80,000 using the company's cost of capital. Project C requires an investment of $250,000 and has a net present value of
$65,000 using the company's cost of capital. Which projects(s) should be accepted?
O Because the projects are independent, more than one project can be accepted. Accept Projects A, B, and because they all
have positive net present values.
Im
O Because the projects are independent, more than one project can be accepted. Accept both Project B and Project C because
their combined net present value is larger than Project A's net present value.
Because the projects are independent, only one project can be accepted. Accept Project A because it has the highest net
present value.
O Because the projects are independent, more than one project can be accepted. Accept Project A because it has the highest
net present value.
8
g
9
a
O
A
8
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