Company A has the following projects in which it can invest: Company A has...
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Finance
Company A has the following projects in which it can invest:
Company A has no other investment opportunities. Projects C and D are mutually exclusive. The capital investment budget at t=0 is limited to 25 million. Company A is committed to maximising the wealth of its shareholders.
How should Company A utilise its capital investment budget if:
i.) all projects are divisible (can be scaled down)?
ii.) all projects are indivisible?
Please show any calculations done.
Project NPV at t=0, m D |||| Cash outflow at t=0, m 10 13 3.8 5.0 4.8 Present value at t=0 of cash inflows, m 19 38 7.3 9.9 7.1 9 25 3.5 4.9 2.3
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