Question MSC is evaluating the following projects for next years capital program Project Initial investment (Rands) Length in years Annual cash flow (Rands) A 3,000,000 00 6 720,000 00 B 3,500,000 00 5 980,000 00 C 4,000,000 00 7 905,000 00 D 5,000,000 00 4 1,720,000 00 E 6,000,000 00 6 1,510,000 00 F 7,000,000 00 5 1,950,000 00 G 8,000,000 00 7 1,730,000 00 Projects A and B are mutually exclusive and so are Projects D and E MSC has a 12 cost of capital and a maximum of R15 million to spend on capital projects next year Required Use capital rationing to determine which projects should be included in MSCs capital program ( 15 Marks )

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Question: Question MSC is evaluating the following projects for next years capital program: Project Initial investment (Rands) Length in years Annual cash flow (Rands) A 3,000,000.00

Question MSC is evaluating the following projects for next years capital program:

Project	Initial investment (Rands)	Length in years	Annual cash flow (Rands)
A	3,000,000.00	6	720,000.00
B	3,500,000.00	5	980,000.00
C	4,000,000.00	7	905,000.00
D	5,000,000.00	4	1,720,000.00
E	6,000,000.00	6	1,510,000.00
F	7,000,000.00	5	1,950,000.00
G	8,000,000.00	7	1,730,000.00

Projects A and B are mutually exclusive and so are Projects D and E. MSC has a 12% cost of capital and a maximum of R15 million to spend on capital projects next year.

Required Use capital rationing to determine which projects should be included in MSCs capital program. (15 Marks)

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