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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.
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?