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A co has 3 projects available with the following initial costs & npvs
Project A initial cost $20 000 NPV 2000
B ” $30 000 NPV 2400
C ” $10 000 NPV 1200
The capital available for investment is limited to & 40 000 if the projects are divisible what is the maximum NPV that can be achieved
Q2 The following are today s exchange rates for sterling
Euro/pound 1,44
Yen/pound 232,11
US/pound 1,71
How many euros wld u get to the US $
Question 1
The NPV/$ is $0.10 for A; $0.08 for B; and $0.12 for C.
So invest as much as you can in C (limited to 10,000), and balance (30,000) in 3/4 of A.
(Have you watched the free lecture on capital rationing?)
Question 2:
1 pound = 1.44 euros
1 pound = 1.71 $’s
So 1.71 $’s = 1.44 euros
So one $ = 0.8421 euros