Intel is considering the following projects (shown in the table below) to improve their production processes.
Chips have a short life, so a 3-year horizon is used in evaluation. Which project(s) should be done if the budget is $70,000?
What is the opportunity cost of capital?
You must state here the rate of return of each project (in percent to 2 decimal places, e.g. 4.47% or 25.61%).
|
Project
|
First Cost
|
Benefit
|
|
1
|
$20,000
|
$11,000
|
|
2
|
$30,000
|
$14,000
|
|
3
|
$10,000
|
$6,000
|
|
4
|
$5,000
|
$2,400
|
|
5
|
$25,000
|
$13,000
|
|
6
|
$15,000
|
$7,000
|
|
7
|
$40,000
|
$21,000
|
Selected project(s): ______________
Opportunity cost of capital: ________
What are the IRRs for each Project?