A Sky resort is studying a half a dozen capital improvement projects. It has allocated shs. 1 million for capital budgeting purposes. The following proposals and associated probability= indexes have been determined. The projects themselves are independent of one another. Project Amount Profitability A 500000 1.21 B 150000 0.95 C 350000 1.20 D 450000 1.18 E 200000 1.20 F 400000 1.05 a) With strict capital rationing, which of these investments should be undertaken? b) is this an Optimal strategy, Why?
A Sky resort is studying a half a dozen capital improvement projects. It has allocated shs. 1 million for capital budgeting purposes. The following proposals and associated probability= indexes have been determined. The projects themselves are independent of one another. Project Amount Profitability A 500000 1.21 B 150000 0.95 C 350000 1.20 D 450000 1.18 E 200000 1.20 F 400000 1.05 a) With strict capital rationing, which of these investments should be undertaken? b) is this an Optimal strategy, Why?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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A Sky resort is studying a half a dozen capital improvement projects. It has allocated shs. 1 million for capital budgeting purposes. The following proposals and associated probability= indexes have been determined. The projects themselves are independent of one another.
Project Amount Profitability
A 500000 1.21
B 150000 0.95
C 350000 1.20
D 450000 1.18
E 200000 1.20
F 400000 1.05
a) With strict capital rationing, which of these investments should be undertaken?
b) is this an Optimal strategy, Why?
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