Y6

The state's fish and game department have a capital budget of $9 million. What is the government's opportunity cost of capital if it has the following projects to consider? What does this indicate about which projects should be recommended?

Project First Cost Rate of Return (%) B/C Ratio at 7%

A $2,000,000 13 1.40

B 1,000,000 14 1.25

C 2,000,000 15 1.36

D 3,000,000 10 1.15

E 2,000,000 13 1.23

F 3,000,000 15 1.30

G 3,000,000 11 1.10

H 1,000,000 14 1.42