A firm utilizes a strategy of capital rationing
January 10th, 2018
A firm utilizes a strategy of capital rationing, which iscurrently $250,000 and the following and is considering the following 2 projects: Project A has a cost of $150,000 and the following cash flows: year 1$30,000: Year 2 $110,000 and year 3 $100,000. Project B has a cost of $225,000 and the following cash flows year 1 $120,000; year 2 $90,000 and year 3 $50,000 and year 4 $50,000. Using a 12% cost of capital, which decision should the financial manger make?