Capital rationing Blueburr Company is preparing its capital budget and is evaluating several capital projects to determine which should be funded. The company plans to spend $10,000 on capital projects and has a cost of capital of 16 percent. The available projects have the following costs and internal rates of return:

The company evaluates projects using the IRR method.

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Project Cost IRR V $1,000 20.0% W 3,000 17.5 X 2,000 19.0 Y 3,500 17.0 Z 6,800 17.5