Given a $10,000,000 Capital Budget, a Discount Rate of 10

question 1

Multiple Choice

Given a $10,000,000 capital budget, a discount rate of 10%, and seven projects totaling $14,000,000, which capital rationing rule should be used?

• A) Invest in the lowest cost projects until all investment funds are exhausted
• B) Invest in all projects with an IRR > 0
• C) Invest in all projects with an IRR > 10%
• D) Invest in the projects with the highest IRR until all investment funds are exhausted
• E) Invest in the projects with the highest IRR that are greater than or equal to 10% until all investment funds are exhausted

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