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PLEASE ANSWER> I'LL THUMBS UP! (Capital rationing) The Cowboy Hat Company of Stillwater, Oklahoma, is considering seven capital investment proposals for which the total funds
PLEASE ANSWER> I'LL THUMBS UP!
(Capital rationing) The Cowboy Hat Company of Stillwater, Oklahoma, is considering seven capital investment proposals for which the total funds available are limited to a maximum of $17 million. The projects are independent and have the costs and profitability indexes associated with them shown in the popup window: a. Under strict capital rationing, which projects should be selected? b. What problems are there with capital rationing? a. Under strict capital rationing, which projects should be selected? (Select the best choice below.) O A. Projects C, F, E, and B O B. Projects C, F, and B C. Projects C, D, and F D. Projects D, E, and A O E. Projects C, D, A, and G b. "Capital rationing may force the firm to reject projects with positive net present values, which is contrary to the firm's goal of maximization of shareholder's wealth, and it is thus not an optimal strategy." Is the above statement about the capital rationing true or false? (Select from the drop-down menu.) i Data Table PROJECT COST PROFITABILITY INDEX A $3,000,000 1.18 B 4,000,000 1.05 5,000,000 1.39 D 6,000,000 1.32 E 4,000,000 1.16 F 6,000,000 1.23 G 2,000,000 1.13 (Click on the icon located on the top-right corner of the data table above in order to copy its contents into a spreadsheet.)Step by Step Solution
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