Orchid Biotech Company is evaluating several different development projects for experimental drugs. Although the cash flows are difficult to forecast, the company has come up with the following estimates of the initial capital requirements and NPVs for the projects: 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). a. Suppose that Orchid has a total capital budget of $60million. How should it prioritize these projects? b. Suppose that Orchid currently has 12research scientists and does not anticipate being able to hire more in the near future. How should Orchid prioritize these projects? a. 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.)

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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Orchid Biotech Company is evaluating several different development projects for experimental drugs. Although the
cash flows are difficult to forecast, the company has come up with the following estimates of the initial capital
requirements and NPVs for the projects: 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).
a. Suppose that Orchid has a total capital budget of $60million. How should it prioritize these projects?
b. Suppose that Orchid currently has 12research scientists and does not anticipate being able to hire more in the near
future. How should Orchid prioritize these projects?
a. 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.)
Transcribed Image Text:Orchid Biotech Company is evaluating several different development projects for experimental drugs. Although the cash flows are difficult to forecast, the company has come up with the following estimates of the initial capital requirements and NPVs for the projects: 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). a. Suppose that Orchid has a total capital budget of $60million. How should it prioritize these projects? b. Suppose that Orchid currently has 12research scientists and does not anticipate being able to hire more in the near future. How should Orchid prioritize these projects? a. 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.)
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