Hi
I feel the answer is C as in the first case ( which may be true) though the expected IRR may be high, but the risks also could be high and so it depends on the circumstances and the objectives of hte company at that time.
Yes but one can argue that its a capital project and not an investment policy then y go for a matching concept.
For the second case, answer is no as the amount set aside for capital project may not always be used for meeting debt obligations as generally one may use a debt to finance a capital project.
The third case is appropriate as it is not wise to invest in a capital project if the NPV @ risk adjusted discount rate of the same is negative.. whts the actual answer ???
Last edited by a moderator: Jan 29, 2012