You are analyzing projects for a firm with a capital budget of $ 150 million. The table below summarizes the projects that are available to the firm and the net present values of these projects. Project Investment needed Net Present Value A $ 35 million $ 5 million B $ 15 million $ 3 million C $ 35 million $ 10 million D $ 25 million $ 8 million E $ 45 million $ 15 million F $ 10 million $ 5 million G $ 15 million $ 5 million H $ 20 million $ 7 million Which projects would you accept, given the capital rationing constraint? Assume that the constraints is internally imposed (by the firm’s management), can you estimate the effect of this constraint on firm value?

You are analyzing projects for a firm with a capital budget of $ 150 million. The table below summarizes the projects that are available to the firm and the net present values of these projects. Project Investment needed Net Present Value A $ 35 million $ 5 million B $ 15 million $ 3 million C $ 35 million $ 10 million D $ 25 million $ 8 million E $ 45 million $ 15 million F $ 10 million $ 5 million G $ 15 million $ 5 million H $ 20 million $ 7 million Which projects would you accept, given the capital rationing constraint? Assume that the constraints is internally imposed (by the firm’s management), can you estimate the effect of this constraint on firm value?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 7P: Your division is considering two investment projects, each of which requires an up-front expenditure...

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