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Meds R Us has just finished evaluating several projects. Their cost of capital is 10%. NPV’s are calculated by the firm’s current cost of capital.
Project Cost NPV IRR
A $12,000 $ -3,000 9%
B $42,000 $12,000 17%
C $45,000 $ 6,000 12%
D $51,000 $12,000 16%
E $63,000 $15,000 11%
B. If Meds R Us has a Capital Budget limit of $120,000, and assuming the projects are of the same risk, which projects should they accept? Why?
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