Blakeley Company is considering the following six capital investment projects: Blakeley has a minimum required rate of return of 12%. Given this information, what ranking should Blakeley use on the capital investment projects?

Question

Blakeley Company is considering the following six capital investment projects:  Blakeley has a minimum required rate of return of 12%. Given this information, what ranking should Blakeley use on the capital investment projects?

Quizplus · Accepted Answer

As Blakeley has a minimum required rate of return of 12%, it should choose the projects that have a higher rate of return than this minimum. Therefore, projects D, C, and A should be chosen as they have a rate of return above 12%. Projects B, E, and F have a rate of return below the minimum required rate, so they should not be chosen. Among the selected projects, there is no need for further ranking as A,B,C's rate of returns are not lower than the minimum required rate, they can be taken based on their investment needs.

Blakeley Company Is Considering the Following Six Capital Investment Projects