You are a financial analyst tasked with evaluating investment projects for a company operating under capital rationing. Discuss the key considerations and challenges you would face while applying project appraisal techniques in this context. Additionally, provide a detailed comparison of the 'make or buy' approach for project evaluation, highlighting its relevance in optimising resource allocation. Support your response with real-world examples.

TOPIC POOR = 0%-24% ROOM TO DEVELOP = 25%- 50% PROFICIENT = 51%-74% MASTERLY = 75-100% CRITERIA Understanding of capital rationing The student displays a limited understanding of capital rationing with significant gaps in comprehension. The student provides a basic understanding of capital rationing but may lack depth or overlook certain aspects. The student shows a solid understanding of capital rationing principles and its impact on project selection. The student thoroughly demonstrates a deep understanding of capital rationing concepts, including its implications and constraints. Application of project appraisal techniques The student attempts to apply project appraisal techniques but with major errors or inappropriate choices. The student utilises some project appraisal techniques but with inconsistencies or limited relevance to the context provided. The student effectively employs relevant project appraisal techniques, showcasing a competent application in the given scenario. The student skilfully applies a wide range of project appraisal techniques, illustrating a comprehensive grasp of their practical implementation under capital rationing. "Make or Buy" approach comparison The student offers a superficial or unclear comparison with minimal or no real-world examples provided. The student presents a basic comparison of the approach with limited examples, possibly missing some key points. The student provides a solid comparison of the "make or buy" approach, supported by relevant examples that underscore its significance. The student offers a highly insightful and detailed comparison of the "make or buy" approach, drawing upon real-world examples to highlight its importance in decision-making. Critical analysis and consideration of challenges The student lists challenges without a clear analysis or provides inadequate solutions or recommendations. The student identifies some challenges without in-depth analysis or offers limited solutions without comprehensive insights. The student presents a thoughtful analysis of challenges, addressing their implications and suggesting potential solutions. The student demonstrates exceptional critical thinking by thoroughly analysing challenges specific to applying project appraisal techniques under capital rationing. Integration of real-world examples The student uses limited or tangentially related examples that do not contribute significantly to the discussion. The student includes some relevant examples, but they may lack detail or be loosely connected to the concepts discussed. The student incorporates appropriate real-world examples that enhance the discussion and illustrate key points effectively. The student skilfully integrates multiple relevant and detailed real-world examples to support arguments and enhance understanding.