Galaxy Satellite Co. is attempting to select the best group of independent projects competing for the firm’s fixed capital budget of $10,000,000. Any unused portion of this budget will earn less than its 20 percent cost of capital. A summary of key data about the proposed projects follows.
|
Project |
PV of Inflows |
Initial Investment |
IRR |
|
|
A |
$3,050,000 |
$3,000,000 |
21% |
|
|
B |
$9,320,000 |
$9,000,000 |
25% |
|
|
C |
$1,060,000 |
$1,000,000 |
24% |
|
|
D |
$7,350,000 |
$7,000,000 |
23% |
- Use the NPV approach to select the best group of projects. (Note that just the PV of inflows is given, you must subtract the initial investment to find the NPV.)
- Use the IRR approach to select the best group of projects. (Note that the discount rate or the cost of capital is 20%.)
- Which projects should the firm implement based on your analysis of both techniques and given the capital rationing amount? Write an email to your boss, Andy Fast, the CFO, explaining your rationale proving the choices based on the considerations of shareholder value and the maximum investment budget. Keep in mind that you are less concerned with using the whole budget than with maximizing the total return to Galaxy satellite.
Looking for a solution written from scratch with No plagiarism and No AI?
WHY CHOOSE US?
We deliver quality original papers |
Our experts write quality original papers using academic databases.We dont use AI in our work. We refund your money if AI is detected |
Free revisions |
We offer our clients multiple free revisions just to ensure you get what you want. |
Discounted prices |
All our prices are discounted which makes it affordable to you. Use code FIRST15 to get your discount |
100% originality |
We deliver papers that are written from scratch to deliver 100% originality. Our papers are free from plagiarism and NO similarity.We have ZERO TOLERANCE TO USE OF AI |
On-time delivery |
We will deliver your paper on time even on short notice or short deadline, overnight essay or even an urgent essay |