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may i know why in choice 2, p804 not taken ? That investment takes 1000.If the projects are divisible and fund available is 1.2m then why not we take p804? in calculation of IRR why only 3 investment are taken ,where are the rest? and also in MIRR why some selective investment are taken?
its q20 from bpp revision kit
P0804 is not taken in Choice 2 because it has the lowest PI.
Since Choice 1 is the better plan, the IRR is calculated on the investments in Choice 1.
MIRR is not asked for in this question.
Oh it’s maximum rate for additional financing .I misread it as MIRR.sorry .So why we have taken only selective and rejected investment:?
Because that is what the question wants.
You already have the best plan from part (a), and part (b) is asking what the maximum interest rate would be to make it worth doing the extra investments as well.
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