(Answered) Docs r us has just finished evaluating several projects

Economics

Docs 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 $21,000 $5,000 11%

B $17,000 $4,000 16%

C $15,000 $2,000 12%

D $14,000 $4,000 17%

E $4,0000 $-1,000 9%

A. With no capital rationing, and assuming the projects are of the same risk, which projects should Docs R Us accept? Why?

B. If Docs R Us has a capital budget limit of $40,000, and assuming the projects are of the same risk, which projects should they accept? Why?

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Business Economics, Economics

Category:- Business Economics
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