A capital rationing problem is defined for you as follows: Three projects are to be evaluated at

Question:

A capital rationing problem is defined for you as follows: Three projects are to be evaluated at a MARR of 12.5% per year. No more than $3.0 million can be invested.

(a) Use a spreadsheet to select from the independent projects.

(b) If the life of project 3 can be increased from 5 to 10 years for the same $1 million investment, use Goal Seek to determine the NCF in year 1 for project 3 alone to have the same PW as the best bundle in part (a). All other estimates remain the same. With these new NCF and life estimates, what are the best projects forinvestment?

A capital rationing problem is defined for you as follows:

MARR
Minimum Acceptable Rate of Return (MARR), or hurdle rate is the minimum rate of return on a project a manager or company is willing to accept before starting a project, given its risk and the opportunity cost of forgoing other... Capital Rationing
Capital rationing is the act of placing restrictions on the amount of new investments or projects undertaken by a company. Capital rationing is the decision process used to select capital projects when there is a limited amount of funding available....