Question
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
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?
PROJECT COST PROFITABILITY INDEX A 2,000,000 1.18 B 4,000,000 1.03 C 5,000,000 1.37 D 6,000,000 1.37 E 2,000,000 1.14 F 6,000,000 1.23 G 4,000,000 1.17
.
a. Under strict capital rationing, which projects should be selected?
b. What problems are there with capital rationing?
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Fatal Numbers Why Count On Chance
Authors: Hans Magnus Enzensberger ,Karen Leeder
1st Edition
1935830015, 978-1935830016
