Griffin-Kornberg is reviewing the following projects for next years capital program. Projects A and B are mutually

Question:

Griffin-Kornberg is reviewing the following projects for next year€™s capital program.

Projects A and B are mutually exclusive and so are Projects D and E. Griffin- Kornberg has a 9% cost of capital and a maximum of $14 million to spend on capital projects next year. Use capital rationing to determine which projects should be included in Griffin-Kornberg€™s capitalprogram.

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.... Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...