Suppose in the capital budgeting model in Figure 6.1 that each investment requires $2000 during year 2, and only $5000 is available for investment during year 2. a.  Assuming that available money...

Suppose in the capital budgeting model in Figure 6.1 that each investment requires $2000 during year 2, and only $5000 is available for investment during year 2.


a.  Assuming that available money uninvested at the end of year 1 cannot be used during year 2, what combination of investments maximizes NPV?

b.  Suppose that any uninvested money at the end of year 1 is available for investment in year 2. Does your answer to part a change?

Figure 6.1