Solution-Process of capital rationing in its decision making

Process of capital rationing in its decision making

Reference no: EM131318313

The Suboptimal Glass Company uses a process of capital rationing in its decision making. The firm's cost of capital is 10 percent. It will only invest $77,000 this year. It has determined the internal rate of return for each of the following projects.

Project	Project Size	Internal Rate of Return
A.....................	$10,500	21%
B.....................	30,500	22
C.....................	25,500	18
D.....................	10,500	13
E.....................	10,500	20
F......................	20,500	11
G.....................	10,500	16

a. Select the projects that the firm should accept.

b. If Projects A and B are mutually exclusive, how would that affect your overall answer? That is, which projects would you accept in spending the $77,000?

Reference no: EM131318313

Questions Cloud

Present a two year earnings per share : Earnings per share in the prior year was $8.00. Use the earnings per share computed in (a) and present a two-year earnings per share comparison for the current year and the prior year.

Write a paper that analyzes evolution of affirmative action : Using the original goal of affirmative action as a framework, write a paper that analyzes the evolution of affirmative action over the last 40+ years.

What do we mean by the term essential conditions : Name at least three reasons why some bolts fail mechanically ? What is the most common cause of bolted joint misbehavior or failure? Name at least two problems that can be caused by overtightening the bolts ? What do we mean by the term essential..

What is the monthly rate of interest : Raymond borrowed $3,000.00 from Loans R Us Company. The line of credit agreement provided for repayment of the loan in equal monthly payments of $668.76 which includes interest of 9.00 % per annum calculated on the unpaid balance. a. What is..

Process of capital rationing in its decision making : The Suboptimal Glass Company uses a process of capital rationing in its decision making. The firm's cost of capital is 10 percent. It will only invest $77,000 this year. It has determined the internal rate of return for each of the following proje..

What is the stiffness ratio of this eccentric joint : What is the minimum preload required to prevent separation of this eccentric joint?

How do the four factors in porters diamond analyze success : Using Porter's diamond framework for national competitiveness, discuss the success of the software industry in India. How do the four factors in Porter's diamond explain the success of this industry over related industries in the country?

Compute the percentage of earnings retained : Compute the Percentage of earnings retained, Price/earnings ratio, Dividend payout, Dividend yield and Book value per share for 2011 and 2010:

Net present value at an percent discount rate : a. What is the net present value at an 8 percent discount rate? b. What is the internal rate of return? c. In this problem, would you make the same decision under both parts a and b?

User Account

All Pages

Process of capital rationing in its decision making

Reference no: EM131318313

Reference no: EM131318313

Questions Cloud

Reviews

Write a Review

Finance Basics Questions & Answers

What will your annualized holding period return

Carters preferred stock pays a dividend of 100 per quarter

Discuss the concepts of risk and return

How is consumer debt different today than in the past

Declining demand for ethanol product

What are the group decision-making processes and structures

Problem caused by information asymmetry in financial markets

How does the pattern of cash dividend payments change over

At what level of steel would steel works reorder

How does an etf differ from a closed-end fund

Fundamental challenges of strategic management

The sections financial calculator and rate of return

Assured A++ Grade

Academics

Major Subjects

Majors

Get In Touch

TERMS & POLICIES

HELP & SUPPORT