Icmap, accounting, Basic Statistics

03 (a) Explain the term capital rationing and suggest the criteria to be used in ranking projects under capital rationing. (05)
(b) There are three projects X Y and Z having following cash outflow and net present value.
Project Cash out Flow NPV
X 80,000 30,500
Y 110,000 20,650
Z 105,000 27,000
There are 3 companies Alpha Beta and Gama with capital budget for the current year of Rs. 100,000 Rs. 150,000 and Rs. 200,000
i) Calculate the profitability index (03)
ii) Rank the projects using the profitability index(PI). (03)
iii) Suggests which project each company will take.
Posted Date: 2/6/2012 12:32:17 AM | Location : United States

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