The Following Table Gives the Available Projects for a Firm

question 67

Essay

The following table gives the available projects for a firm.
A B C D E
Initial Investment 10 13 6 7 2
NPV 3.5 -2 0.5 6 3
The firm has only $20 million to invest.Which project(s)will be accepted?

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Definitions:

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life.

Equipment

Tangible property or assets, excluding real estate and vehicles, used in the operation of a business to produce goods or services.

Unearned Revenue

Money received by a company for goods or services yet to be delivered or provided, recorded as a liability.

Liability

An obligation of an entity arising from past transactions or events, the settlement of which may result in the transfer or use of assets, provision of services, or other yielding of economic benefits in the future.