A project manager is developing a cost management plan and needs to determine the best source of funding for a project that is dictated by a legal requirement. The cost of capital is estimated at 9.7% for non-dividend paying equity, 6.7% for debt, and 5.1% for
self-funding. The NPV of the project is $500,000, and the opportunity cost is $750,000.
What is the project manager's best course of action?
A. Fund the project with equity since there are no dividend obligations
B. Select the self-funding option since it provides the
lowest cost of capital
C. Perform an alternatives analysis since there are multiple factors to consider
D. Recommend the termination of the project since another project has a higher NPV
HINT: What tool or technique associated with the Plan Cost Management process might be helpful in this situation?