Matakuliah
Tahun
: Manajemen Keuangan 1
: 2009
PERMASALAHAN PEMERINGKATAN PROYEK
Pertemuan 18
Capital Rationing
• You could rank the projects by IRR:
IRR
Our budget is limited
so we accept only
projects 1, 2, and 3.
25%
20%
15%
10%
5%
1
2
3
4
$X
Bina Nusantara University
5
$
3
Capital Rationing
• Ranking projects by IRR is not
always the best way to deal with a
limited capital budget.
• It’s better to pick the largest NPVs.
• Let’s try ranking projects by NPV.
Bina Nusantara University
4
Bina Nusantara University
5
Bina Nusantara University
6
Bina Nusantara University
7
Bina Nusantara University
8
Bina Nusantara University
9
Bina Nusantara University
10
Bina Nusantara University
11
Step 2 Calculate the EAA
 )
(Equivalent Annual Annuity
• NPV : PVIFA
• EAA1 = 1.433/2,322= $617
• EAA2 = 1.664/3.889= $428
• Decision Rule: Select the highest EAA.
We would choose machine #1.
Bina Nusantara University
12
Bina Nusantara University
13