P11-23 (static) Question Help Constraints on borrowing. Country Farmlands, Inc.
ID: 2786605 • Letter: P
Question
P11-23 (static) Question Help Constraints on borrowing. Country Farmlands, Inc. is consid ering the following potential projects for this coming year, but has only $200,000 for these projects: Project A: Cost $60,000, NPV $4,000, and IRR 11% Project B: Cost $78,000, NPV $6,000, and IRR 12% Project C: Cost $38,000, NPV $3,000, and IRR 10% Project D: Cost $41,000, NPV $4,000, and IRR 9% Project E: Cost $56,000, NPV $6,000, and IRR 13% Project F: Cost $29,000, NPV $2,000, and IRR 7% What projects should Farmlands pick? What projects should Farmlands pick? (Select the best responses.) A. A. B, D, and E. B. C,D,E,and F. O C. A, C, D, and E OD, B,C,D,and E. O E. B, C, D, and F Click to select your answer and then click Check Answer SD All parts showing Clear All Check Answer Coz This course (Business Finance) is based on Brooks: Financial Management: Core Concepts 3e 14Explanation / Answer
Project
NPV
cost
Benefit cost ratio =1+(NPV/cost)
A
4000
60000
1.066667
B
6000
78000
1.076923
C
3000
38000
1.078947
D
4000
41000
1.097561
E
6000
56000
1.107143
F
2000
29000
1.068966
Ranking on the basis of benefit cost Ratio
Project
Benefit cost ratio =1+(NPV/cost)
Rank
A
1.066667
6
B
1.076923
4
C
1.078947
3
D
1.097561
2
E
1.107143
1
F
1.068966
5
Project
RanK
E
1
D
2
C
3
B
4
Answer is D
BCDE
Project
NPV
cost
Benefit cost ratio =1+(NPV/cost)
A
4000
60000
1.066667
B
6000
78000
1.076923
C
3000
38000
1.078947
D
4000
41000
1.097561
E
6000
56000
1.107143
F
2000
29000
1.068966
Ranking on the basis of benefit cost Ratio
Project
Benefit cost ratio =1+(NPV/cost)
Rank
A
1.066667
6
B
1.076923
4
C
1.078947
3
D
1.097561
2
E
1.107143
1
F
1.068966
5
Project
RanK
E
1
D
2
C
3
B
4
Answer is D
BCDE
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