Allied products has six R&D projects that are potential

Allied products has six R&D projects that are potential candidates for selection during the upcoming fiscal year. The table below provides the expected net present value and capital requirements over the next five yeas for each project. The table also indicates the planned budget expenditures for the entire R&D program during each of the next five years. Which projects should be selected?

Capital required (thousands)

Project NPV (thousand) Y1 Y2 Y3 Y4 Y5

1 140 90 25 22 18 10

2 260 95 50 10 10 20

3 88 58 17 14 12 12

4 176 115 25 25 10 0

5 192 48 20 12 30 40

R&D Budget 180 60 70 40 35