The Carlo Company has been allocated RM600,000 on investment projects for the coming year. Four projects, each
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Question:
- The Carlo Company has been allocated RM600,000 on investment projects for the coming year. Four projects, each with a four-year life and with the following cash flows are currently being considered:
- 1. Distinguish between hard and soft capital rationing
- 2. Assuming that the projects are divisible recommend to the Board, which projects should be accepted using the Net Present Value method and evaluate the total net present value that would be generated
- 3. Discuss the impact on your analysis of each project being indivisible
Year | 0 | 1 | 2 | 3 | 4 |
Project | RMk | RMk | RMk | RMk | RMk |
A | -300 | 100 | 10 | 200 | 200 |
B | -200 | 0 | 0 | 0 | 400 |
C | -100 | 0 | 0 | 80 | 80 |
D | -150 | 60 | 60 | 60 | 60 |
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