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Which projects should be undertaken

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Short O'Funds has R15 million available for investment in the forthcoming period. The firm's cost of capital is 20%. Capital will be freely available in the future. The details of six projects that are currently under consideration can be seen in the table below. All projects are independent and divisible.

Project          Cost (R' 000)                      Present value of inflows at 20%

(R'000)

A                           6 200                           8 701

B                            7 700                           10 318

C                            4 620                              7 515

D                             6 930                              9 086

E                               2 310                            3 500

F                                  3 080                            4 743

Question 1 Which projects should be undertaken? Show all relevant calculations.

Question 2 What NPV will result from the projects selected in Question 1 above?

Reference no: EM132579125

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