Which projects should done using capital rationing thinking

Assignment Help Finance Basics
Reference no: EM13291791

A firm has a $40 million capital budget limit. Five high IRR projects of about equal size are available that have initial investments totaling $30M. A sixth project has an IRR slightly lower than those of the first five, but requires a $16M investment. Several smaller projects are available with much lower IRR's. Discuss which projects should be done using capital rationing thinking.

Reference no: EM13291791

Questions Cloud

Find the value of r for the minimum zener current : A Zener diode specified as follows: VZ=6.8V at IZ=5mA, rZ=20Ω,IZK=0.2mA. The Zener is operated in a regulatorcircuit having a 9V ± 5% supply and a load varying from 2mAto 10mA. Find the value of R for which the minimum Zener current is 21ZK.
Explain equal volumes of an unknown gas and nitrogen : Equal volumes of an unknown gas and nitrogen (N2) gas take 5.37 min and 3.55 minutes, respectvely to effuse through a small pin hole. calculate the molar mass in g/mol of the unknown gas
What is the value of western mountain pizza to pizza place : The risk free rate is 6% and the market risk premium os 4.5%. what is the value of Western Mountain Pizza to Pizza Place?
Explain what is the percent ionization at equilibrium : What is the percent ionization at equilibrium in a 0.60 M solution of dimethylamine, (CH3)2NH (Kb = 5.1 × 10-4), at 25oC
Which projects should done using capital rationing thinking : Several smaller projects are available with much lower IRR's. Discuss which projects should be done using capital rationing thinking.
Determine what would be the piv for the diodes : A ripple voltage of 0.4Vpp is required. Diodes are assumed to have 0.7V drop. Determine the 60Hz transformer secondary voltage and the size capacitor required. What would be the PIV for the diodes
Calculate the value of resistence r1 and r2 : 24 Volt source. Into a 2ohm fuse with 60ma following through.Seperates into R1 and Device 2 which requires 24V, 480mW to operate. Calculate R1.
Compute the induced emf in the coil : Suppose the magnetic field changes uniformly from 0.405 T to 0.220 T in the next 0.684 s. Compute the induced emf in the coil
What is the ph of a solution of methylamine : What is the pH of a 0.17 M solution of methylamine (CH3NH2, Kb = 4.4 × 10-4) at 25oC

Reviews

Write a Review

Finance Basics Questions & Answers

  What is the current market value of one of these bonds

Maryland Department of Transportation has issued 25-year bonds that make semiannual coupon payments at a rate of 9.93 percent. The current market rate for similar securities is 10.79 percent.

  Expected return on the market portfolio

Suppose the yield on short-term government securities (perceived to be risk-free) is about 4%. What is the expected return on the market portfolio? What would be the expected return on a zero-beta stock?

  What is the effective annual interest rate

What is the effective annual interest rate on this lending arrangement?

  Finding present value of ordinary annuity

Find out the present value of ordinary annuity which pays $4,800 per year for eight years, supposing the annual discount rate is seven percent?

  What are the risks and rewards associated

Discuss the various types of bonds and how they are used to raise funds by public and private institutions and why is each type of security used, and what are the risks and rewards associated with a particular security?

  Determine at what level of r npv is a maximum

If you have sufficient background, solve this using calculus. If not, graphically find the top of the NPV hill (where slope = 0). What is the maximum value of NPV?

  What is the loan rate on this bank loan

Vaspussen, Inc., is looking for a five-year term loan of $5 million. Its bank is willing to make the loan. The firm will have to pay a premium of 2.2 percent for default risk and another 0.95 percent for maturity risk. The current prime rate is 6...

  Compute the value of a share

Von Bora Company is expected to pay a $3.00 dividend at the end of this year. If you expect Von Bora Company's dividend to grow by 6 percent per year forever and VBC's equity cost of capital is 12%,

  What is the fixed monthly payment that would be required

Suppose that you buy a new car that costs $30,000 and you are able to pay $3,000 of the cost in cash and borrow the remainder from a bank that offers a conventional amortizing loan with monthly payments.

  What is the effective or equivalent

paying in 65 days and thus becoming 35 days past due - without a penalty because its suppliers currently have excess capacity. What is the effective, or equivalent, annual cost of the trade credit?

  How much could the machine be sold for today

A financial analyst calculated that the after-tax salvage value for a machine was $10,200. The current book value of the asset is $12,000 and the firm's tax rate is 30%. How much could the machine be sold for today?

  Influencing the price level

The thrifts had their origins in the early 1800s except for the credit unions which began in the early 1900s. All of them were established to provide a place where small savers could place their savings

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd