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 $61,800 this year. It has determined the internal rate of return for each of the following projects.
| Project |
Project size |
Internal rate
of return |
| A |
$ |
11,700 |
|
|
13% |
|
| B |
|
31,700 |
|
|
12 |
|
| C |
|
21,700 |
|
|
15 |
|
| D |
|
11,700 |
|
|
20 |
|
| E |
|
11,700 |
|
|
22 |
|
| F |
|
21,700 |
|
|
21 |
|
| G |
|
16,700 |
|
|
18 |
|
|
(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.)
Project C
Project A
Project D
Project F
Project E
Project B
Project G
(b) If Projects E and F are mutually exclusive, which projects would you accept in spending $61,800? (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.)
Project C
Project A
Project D
Project B
Project E
Project F
Project G