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Galaxy Satellite Co
$ 12.00

Galaxy Satellite Co. is attempting to select the best group of independent projects competing for the firm's fixed capital budget of $10,000,000. Any unused portion of this budget will earn less than its 20 percent cost of capital. A summary of key data about the projects follows

Project

Initial investment

IRR

PV of inflows at 20%

A

3,000,000

21%

3,050,000

B

9,000,000

25%

9,320,000

C

1,000,000

24%

1,060,000

D

7,000,000

23%

7,350,000

Use the IRR approach to select the best group of projects, if the required rate of return is 23.5%.

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