Problem

Borghia Pharmaceuticals has $1 million allocated for capital expenditures. Which of the fo...

Borghia Pharmaceuticals has $1 million allocated for capital expenditures. Which of the following projects should the company accept to stay within the $1 million budget? How much does the budget limit cost the company in terms of its market value? The opportu­nity cost of capital for each project is 11%.

Project

Investmnt ($ thousands)

NPV ($ thousands)

IRR (%)

1

300

66

17.2

2

200

-4

10.7

3

250

43

16.6

4

100

14

12.1

5

100

7

11.8

6

350

63

18.0

7

400

48

13.5

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Solutions For Problems in Chapter 5