Capital investments QUESTION 4 (10 marks; 18 minutes) You...
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Accounting
Capital investments
QUESTION 4 (10 marks; 18 minutes) You are appointed as a project officer at 3 Military Hospital. A capital budget of R1 500000 is made available and there are three investment opportunities: a. Adding a wing for in-patient treatment of substance abuse, b. Adding a pathology laboratory, and c. Expanding the outpatient surgery wing. The initial investments and the net present value for the three alternatives are as fallows: Required: 4.1 Rank the projects on the basis of NPV and allocate the funds in order of this ranking. (3) 42 What is the total NPV realized by the medical center using this approech? Is that the best decision for the project? (3) Assume that the size of the lat (space) on which the hospital is. allocated makes the substance abuse wing and the outpatient surgery wing mutually exclusive. 4.3 With unlimited capital, which of those two projects would be chosen? (2) 4.4 With limited capital and the three projects being considered, which projects would be chosen? (2)
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