Which project should the firm undertake


Problem:

A firm has the following investment opportunities:

Investment
NPV
IRR

Project A
Investment $150,000
NPV $30,000
IRR 14%

Project B
Investment $120,000
NPV $20,000
IRR 13%

Project C
Investment $100,000
NPV $25,000
IRR 12%

Project D
Investment $ 10,000
NPV $ 6,000
IRR 11%

If the cost of capital is 10% and the capital budget is limited to $280,000, which project(s) should the firm undertake?

a. project A, B, and C

b. project A and C

c. project A and B

d. project A, B, and D

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