Mutually exclusive projects 1 or 2

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dashingdude

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I think I chose Project 1 as the cost of capital was a shade lower than IRR.
 
didn't you just have to calculate the NPVs and choose the one with highest NPV?
 
that's how i answered it nirjraina, but i'm not sure if i'm thinking of another question.
 
there was in the afternoon I think this question about what combination of 2 projects to undertake out of 4? I put the combination that gave the highest NPV.
 
I dont know anything about this particular question, but I would calculate NPV with an equal cost of capital to determine which of two mutually exclusive projects to select
 
map1 Wrote:
-------------------------------------------------------
> there was in the afternoon I think this question
> about what combination of 2 projects to undertake
> out of 4? I put the combination that gave the
> highest NPV.


same.
 
cfasuicide Wrote:
-------------------------------------------------------
> map1 Wrote:
> --------------------------------------------------
> -----
> > there was in the afternoon I think this
> question
> > about what combination of 2 projects to
> undertake
> > out of 4? I put the combination that gave the
> > highest NPV.
>
>
> same.


As I recall that the highest combination exceeded the amount of available capital..
 
i think it was below with 50K or something like it
 
I was discussing about the mutually exclusive projects (A,B). Project A had a tiny +ve NPV and project B had a -ve NPV. Based on that I chose Project A.

As far as the other question goes, I picked up choices 2 & 3 (100k, 250k), the ones that generated most value among the projects with initial constraint being 400k.
 
th123 Wrote:
-------------------------------------------------------
> cfasuicide Wrote:
> --------------------------------------------------
> -----
> > map1 Wrote:
> >
> --------------------------------------------------
>
> > -----
> > > there was in the afternoon I think this
> > question
> > > about what combination of 2 projects to
> > undertake
> > > out of 4? I put the combination that gave the
> > > highest NPV.
> >
> >
> > same.
>
>
> As I recall that the highest combination exceeded
> the amount of available capital..

with the highest combination, outflows added to $350, which was less than the $400 available capital from what i remember...
 
ok good, there wqere two projects that would have been over, but i wasnt sure if that combination was a possible answer
 
dashingdude Wrote:
-------------------------------------------------------
> I was discussing about the mutually exclusive
> projects (A,B). Project A had a tiny +ve NPV and
> project B had a -ve NPV. Based on that I chose
> Project A.
>
> As far as the other question goes, I picked up
> choices 2 & 3 (100k, 250k), the ones that
> generated most value among the projects with
> initial constraint being 400k.


i got the same for both.
 
I think two questions are being mixed here. But for mutual exclusive projects, always pick the one with the highest NPV.... For independent budgets with cost constraints, always go with the combination that produces the highest NPV within the cost constraints;)
 
yes. 2 separate ones.

AM: highest NPV (but it had lower IRR)

PM: the combination with 2 highest NPV projects was not an option (and exceeded the available capital) --> the 2nd best combination was what I got...
 
Yeah, I picked 1,2 for the afternoon question. I don't remember the morning question too well.
 
I think I went with the highest NPV but it had the lower IRR --- dont remember which session was that
 
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