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The Suboptimal Glass Company uses a process of capital rationing in its decision making

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The Suboptimal Glass Company uses a process of capital rationing in its decision making. The firm's cost of capital is 12 percent. It will invest only $65,400 this year. It has determined the IRR for each of the following projects:

 

ProjectProject SizeInternal Rate

of ReturnA$10,100   12.0%B20,100   12.5 C25,100   13.5 D10,100   14.0 E10,100   22.0 F20,100   15.0 G10,100   10.0 

 

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.)

 

 

check all that apply 1

 

• Project B
• unanswered
• Project A
• unanswered
• Project D
• unanswered
• Project F
• unanswered
• Project E
• unanswered
• Project G
• unanswered
• Project C
• unanswered

 

b. If projects E and F are mutually exclusive, how would that affect your overall answer? That is, which projects would you accept in spending the $65,400? (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.)

 

 

check all that apply 2

 

• Project B
• unanswered
• Project A
• unanswered
• Project D
• unanswered
• Project F
• unanswered
• Project E
• unanswered
• Project G
• unanswered
• Project C