What is the total npv with this policy

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Question - The following table gives a set of investment opportunities that a firm can take. In the table, you have data of the investment needed in a project, the cash flows for the first three years, the NPV and IRR. All the projects' cash flows extend beyond 3 years and continue longer. Some projects may close sooner, some later. The cost of capital for all projects is 10%. Further data: projects A and B are mutually exclusive, all projects are discrete i.e. you cannot make partial investments in any project. (all cash flows in table in millions)

a. If the firm only accepts projects with payback period of 3 years or lesser. What is the total NPV with this policy?

b. Between A and B which project would you choose?

c. Suppose the firm identifies a new project A* whose cash flows, NPV and IRR mirror that of project A, what would you choose between A*, A and B if they are all mutually exclusive?

d. If the firm has a capital constraint of $ 150 million, which projects would you suggest?

Reference no: EM132982966

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