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Question: 21 in considering investments in large capital projects a company...

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21. In considering investments in large capital projects, a company is deciding in which of the following projects it will invest: (All Values in Smillion) Project A Project B 100 14 Project C 120 16 Capital Required (in year 0) 80 After-tax, yearly cash flow (years 1-10) The company can always nvest its money in long-term bonds that currently yield 5.5% pa. (after tax). In which, if any, of the projects should the company invest if the capital ceiling for investment is S250 million and a project life of 10 years is assumed? Would you argue to raise the investment ceiling?

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