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How do identify six combinations of project investments

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Reference no: EM132603230

A firm has a capital budget of $30,000 and is considering three possible independent projects. Project A has a present outlay of $12,000 and yields $4, 281 per annum for 5 years. Project B has a present outlay of $10,000 and yields $4,184 per annum for 5 years. Project C has a present outlay of $17,000 and yields $5,802 per annum for 10 years. Funds which are not allocated to one of the projects can be placed in a bank deposit where they will earn 15%.

Question (a) Identify six combinations of project investments and a bank deposit which exhaust the budget.

Question (b) Which of the above combinations should the firm choose:

(i) When the reinvestment rate is 15%?

(ii) When the reinvestment rate is 20%?

Explain your answer and show your calculations (spreadsheet printout is acceptable as long as entries are clearly labelled).

Reference no: EM132603230

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