Question
The Suboptimal Glass Company uses a process of capital rationing in its decision making. The firm's cost of capital is 14 percent. It will invest
The Suboptimal Glass Company uses a process of capital rationing in its decision making. The firm's cost of capital is 14 percent. It will invest only $73,600 this year. It has determined the IRR for each of the following projects:
Project | Project Size | Internal Rate of Return |
A | $10,900 | 14.0% |
B | 25,900 | 15.0 |
C | 25,900 | 16.0 |
D | 10,900 | 17.0 |
E | 10,900 | 11.0 |
F | 20,900 | 19.0 |
G | 15,900 | 21.0 |
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.)
- Project Bunanswered
- Project Aunanswered
- Project Dchecked
- Project Fchecked
- Project Gchecked
- Project Eunanswered
- Project Cchecked
b. If projects C and G are mutually exclusive, how would that affect your overall answer? That is, which projects would you accept in spending the $73,600? (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.)
- Project Bchecked
- Project Aunanswered
- Project Fchecked
- Project Cunchecked
- Project Gchecked
- Project Eunanswered
- Project Dchecked
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