The state's fish and game department has a capital budget of $9million. What is the government's opportunity cost of capital if ithas the following projects to consider? What does this indicateabout which projects should be done?
Project A
first cost = 2000000
Rate of Return (%) = 9
B/C Ratio at 7% = 1.23
Project B
first cost = 1000000
Rate of Return (%) = 14
B/C Ratio at 7% = 1.42
Project C
first cost = 2000000
Rate of Return (%) = 10
B/C Ratio at 7% = 1.17
Project D
first cost = 3000000
Rate of Return (%) = 16
B/C Ratio at 7% = 1.45
Project E
first cost = 2000000
Rate of Return (%) = 13
B/C Ratio at 7% = 1.56
Project F
first cost = 3000000
Rate of Return (%) = 15
B/C Ratio at 7% = 1.35
Project G
first cost = 3000000
Rate of Return (%) = 12
B/C Ratio at 7% = 1.32
Project H
first cost = 1000000
Rate of Return (%) = 11
B/C Ratio at 7% = 1.26