The Suboptimal Glass Company uses a process of capital rationing in its decision making. The firm’s cost of capital is 10 percent. It will only invest $78,200 this year. It has determined the internal rate of return for each of the following projects.
Project Project Size Internal Rate
of Return
A $ 10,800 19 %
B 30,800 16 C 25,800 17 D 10,800 18 E 10,800 13 F 20,800 12 G 15,800 15 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.)
check all that apply 1
Project Gunanswered
Project Eunanswered
Project Cunanswered
Project Dunanswered
Project Aunanswered
Project Funanswered
Project Bunanswered
b. If Projects A and D are mutually exclusive, which projects would you accept in spending the $78,200? (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.)
check all that apply 2
Project Aunanswered
Project Dunanswered
Project Cunanswered
Project Funanswered
Project Bunanswered
Project Gunanswered
Project E
