Capital Structure Planning
Capital Budgeting Decision Rules - using NPV
| A. "Capital Rationing" situation | ||||||
| Select projects whose NPV is positive or equivalent to zero. | ||||||
| Arrange in the descending order of NPVs. | ||||||
| Select Projects starting from the list till the capital budget allows. | ||||||
| B. "No capital Rationing" Situation | ||||||
| Select every project whose NPV >= 0 | ||||||
| C. Mutually Exclusive Projects | ||||||
| Select the one with a higher NPV. | ||||||