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 $77,000 this year. It has determined the internal rate of return for each of the following projects.
Suboptimal Glass Company
| |
| Project | Project Size | Internal Rate of Return |
| A | $ | 10,500 | | | 21 | % |
| B | | 30,500 | | | 22 | |
| C | | 25,500 | | | 18 | |
| D | | 10,500 | | | 13 | |
| E | | 10,500 | | | 20 | |
| F | | 20,500 | | | 11 | |
| G | | 10,500 | | | 16 | |
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 A and B are mutually exclusive, which projects would you accept in spending the $77,000? (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.)
