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Homework answers / question archive / The Ajax Corporation has the following set of projects available to it: Project Investment Required Expected Rate of Return ($ Million) (%) A 500 23
The Ajax Corporation has the following set of projects available to it:
|
Project |
Investment Required |
Expected Rate of Return |
|---|---|---|
|
($ Million) |
(%) |
|
| A | 500 | 23.0 |
| B | 100 | 18.0 |
| C | 50 | 21.0 |
| D | 125 | 16.0 |
| E | 300 | 14.0 |
| F | 150 | 13.0 |
| G | 250 | 19.0 |
Note: All projects have equal risk.
Calculate the cumulative investment and complete Ajax's schedule of potential projects. (Hint: Ajax prioritizes projects according to their expected rates of return.)
|
Project |
Investment Required |
Expected Rate of Return |
Cumulative Investment |
|---|---|---|---|
|
($ Million) |
(%) |
($ Million) |
|
| A | 500 | 23.0 | 500 |
| C | 50 | 21.0 | 550 |
| B | 100 | 18.0 | 900 |
| E | 300 | 14.0 | 1,325 |
|
|
What is the optimal capital budget (in millions) for Ajax? $1,025 $900 $1,300 $1,000 |
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