Solution-Process of capital rationing in its decision making

Process of capital rationing in its decision making

Reference no: EM131318292

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: EM131318292

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Process of capital rationing in its decision making

Reference no: EM131318292

Reference no: EM131318292

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