A Firm Has Set a Budget Constraint of $220,000 on New

question 63

Multiple Choice

A firm has set a budget constraint of $220,000 on new investments, which cannot be exceeded.Given the following independent investments, what is the highest NPV that the firm will get?

• A)$ 31,600
• B)$ 45,600
• C)$ 28,750
• D)$ 28,350

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Definitions:

External Financing

Funds a business obtains from outside sources, such as loans, investments, or grants, to support its operations or growth.

Dividend Payout Ratio

A financial metric that shows the percentage of a company's earnings paid to shareholders as dividends, reflecting the company's dividend policy and financial health.

Maximum Rate of Growth

The highest possible expansion rate that a business can achieve without obtaining additional financing from external sources.

Sustainable Rate Of Growth

The maximum rate at which a company can grow its revenues without needing to obtain additional financing.