As a Top Manager, You Must Decide Firm Which of the Proposed

question 146

Multiple Choice

As a top manager, you must decide firm which of the proposed projects should be accepted for the upcoming year since only $6 million is available for the next years's capital budget. What is the total NPV of the projects that should be accepted?

• A) A, B, & F; total cost = $5.5 million; Total NPV= $1.57
• B) F, B, & D; total cost = $6 million; Total NPV= $1.72
• C) E, F, & D; total cost = $65.5 million; Total NPV= $1.45
• D) Cannot be determined.

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Definitions:

Level of Output

The total quantity of goods or services produced by a company or economy at a given time.

Short Run

A time period in economics during which at least one input in the production process is fixed, affecting production capabilities.

Price of Capital

The cost of using capital assets to produce goods or services, often expressed in terms of interest rates or rental rates on capital equipment.

Total Cost

The complete expenditure incurred by a firm in the production of goods or services, including both fixed and variable costs.