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Multi period Capital rationing example

NNoshma7y ago
Greetings Sir, For the example of multi capital rationing, for Year 1, Project B, there is an inflow of $2000. Why do we include it as -2000b and not as +0b, given there is no out flow for this project in Year 1 please? Thank you for your time and help Sir
John MoffatJohn MoffatTutor7y ago#1
The constraint at time 1 is the amount of money available for investment. Investment is needed in projects A and C. Given that B gives a cash inflow it means there is more money available for investment in A and C - i.e. the net investment required is that for A and C less the amount received from B. I do explain this in the lectures and there is no point in using the notes without watching the lectures - the notes are simply lecture notes and it is in the lectures that I explain and expand on the notes.
NNoshma7y ago#2
Thank you for the explanation Sir. I did listen to the lecture. Covering lecture notes while listening to the lectures alongside, I must have missed this part though. Apologies for it Sir. Thank you for your help, Have a good day :)
John MoffatJohn MoffatTutor7y ago#3
No need to apologise, and you are welcome :-)
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