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Budget Limit Cost the Company in Terms of its Market Value

Question

As a chief financial officer of Delta Pharmaceuticals, you recently received a capital expenditure analysis from your financial team. The two selection criteria results are presented below:

                             Investment

                         NPV

           IRR

Project

($,000)

($,000)

(%)

1

300

66

17.2

2

200

-4

10.7

3

250

43

16.6

4

100

14

12.1

5

100

7

11.8

6

350

63

18

 

7

400

48

13.5

           

Your company has only $1 million allocated for capital expenditures. The cost of capital for each project is 11 per cent.

How much does the budget limit cost the company in terms of its market value?

 

Summary

The question belongs to Finance and it discusses about budget limit cost to company in investment decision.

 

Total Word Count 44

 

 

 

 

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