Emerald Bay Furniture Company's managers have gathered all of the capital investment proposals for the year, and they are ready to make their final selections. The following proposals and related rate-of-return amounts were received during the period:
|
Project
|
Capital Investment
|
Rate of Return
|
|
AB
|
$450,000
|
19%
|
|
CD
|
500,000
|
28%
|
|
EF
|
654,000
|
12%
|
|
GH
|
800,000
|
32%
|
|
IJ
|
320,000
|
23%
|
|
KL
|
240,000
|
18%
|
|
MN
|
180,000
|
16%
|
|
OP
|
400,000
|
26%
|
|
QR
|
560,000
|
14%
|
|
ST
|
1,200,000
|
22%
|
|
UV
|
1,600,000
|
20%
|
Assume that the company's minimum rate of return is 15 percent of the $5,000,000 is available for capital investments during the year.
List the acceptable capital investment proposals in the order of probability.
Which proposals should be selected for this year? Why?