The Alfred 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:
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
a) Distinguish between hard and soft capital rationing
b) Assuming that the projects are divisible recommend to the Board, which projects should be
accepted using the
would be generated
c) Discuss the impact on your analysis of each project being indivisible
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