engineeringChips USA is considering the following projects to improve their production process. Chips have a short life, so a 3-year horizon is used in evaluation. Which projects should be done if the budget is $70,000? What is the opportunity cost of capital?
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\begin{matrix} \text{Project} & \text{First Cost} & \text{Benefit}\\ \text{1} & \text{\$20,000} & \text{\$11,000}\\ \text{2} & \text{30,000} & \text{14,000}\\\text{3} & \text{10,000} & \text{6,000}\\ \text{4} & \text{5,000} & \text{2,400}\\ \text{5} & \text{25,000} & \text{13,000}\\ \text{6} & \text{15,000} & \text{7,000}\\ \text{7} & \text{40,000} & \text{21,000}\\ \end{matrix}
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