The Suboptimal Glass Company uses a process of capital rationing in its decision
ID: 2701358 • Letter: T
Question
The Suboptimal Glass Company uses a process of capital rationing in its decision making. The firm%u2019s cost of capital is 10 percent. It will only invest $50,800 this year. It has determined the internal rate of return for each of the following projects.
(a)
Pick out the projects that the firm should accept. (You may select more than one answer. Click the box with a check mark for the correct answer and click to empty the box for the wrong answer.)
(b)
If Projects A and D are mutually exclusive, which projects would you accept in spending $50,800? (You may select more than one answer. Click the box with a check mark for the correct answer and click to empty the box for the wrong answer.)
The Suboptimal Glass Company uses a process of capital rationing in its decision making. The firm%u2019s cost of capital is 10 percent. It will only invest $50,800 this year. It has determined the internal rate of return for each of the following projects.
Explanation / Answer
=============================================If Projects D and E are mutually exclusive, you would select Project E in preference to D. You would then include Project A with the freed up funds. In summary, you would accept E, C, G and A.
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