Identified number of promising projects

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Reference no: EM13908779

A company has identified a number of promising projects, as indicated in Table 2. The cash flows for the first 2 years are shown (they are all negatives).

Table 2: A List of Projects (values in thousands)

Cash flow Project

... 1 ... 2 .. NPV

1 -20 -64 100

2 -40 -50 120

3 -50 -100 100

4 -80 -20 150

5 -80 -80 200

6 -80 -100 240

7 -90 -58 150

The cash flows in later years are positive, and the net present value of each project is shown. The company managers have decided that they can allocate up to $270,000 in each of the first 2 years to fund these projects. If less than $270,000 is used the first year, the balance can be invested at 12% and used to augment the next year’s budget. Which projects should be funded?

Reference no: EM13908779

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