Question
The Suboptimal Glass Company uses a process of capital rationing in its decision making. The firms cost of capital is 10 percent. It will only
The Suboptimal Glass Company uses a process of capital rationing in its decision making. The firms cost of capital is 10 percent. It will only invest $68,000 this year. It has determined the internal rate of return for each of the following projects.
Project | Project Size | Internal Rate of Return | ||||
A | $ | 12,000 | 11 | % | ||
B | 17,000 | 13 | ||||
C | 27,000 | 16 | ||||
D | 12,000 | 15 | ||||
E | 12,000 | 19 | ||||
F | 22,000 | 12 | ||||
G | 17,000 | 17 | ||||
a. Pick out the projects that the firm should accept. (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.)
b. If Projects E and G are mutually exclusive, which projects would you accept in spending the $68,000? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.)
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