What are common reasons for capital rationing? Is capital rationing rational?
Answer to relevant QuestionsWhat causes the time- disparity ranking problem? What reinvestment rate assumptions are associated with the NPV and IRR capital- budgeting criteria? The Tiffin Barker Corporation is considering introducing a new currency verifier that has the ability to identify counterfeit dollar bills. The required rate of return on this project is 12 percent. What is the IRR on this ...Assuming an appropriate discount rate of 11 percent, what is the discounted payback period on a project with an initial outlay of $ 100,000 and the following cash flows? Year 1 = $ 30,000 Year 2 = $ 35,000 Year 3 = $ ...Determine to the nearest percent the IRR on the following projects: a. An initial outlay of $ 10,000 resulting in a free cash flow of $ 2,000 at the end of year 1, $ 5,000 at the end of year 2, and $ 8,000 at the end of ...Why do we focus on cash flows rather than accounting profits in making our capital- budgeting decisions? Why are we interested only in incremental cash flows rather than total cash flows?
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