Capital rationing is a financial constraint that businesses may face at any time. There are certain occasions when there are multiple profitable projects are available for investment but the funds are limited.
The company have 3 projects that all require an initial investment of $200,000, but the company have not enough resources to go ahead with each project simultaneously. This situation is called capital rationing.
|
Year |
Project A |
Project B |
Project C |
|
0 |
-200000 |
-200000 |
-200000 |
|
1 |
30000 |
10000 |
45000 |
|
2 |
30000 |
20000 |
40000 |
|
3 |
30000 |
30000 |
35000 |
|
4 |
30000 |
40000 |
30000 |
|
5 |
30000 |
50000 |
30000 |
|
6 |
30000 |
60000 |
30000 |
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