AbstractA method is described of allocating funds between projects in a firm with the following characteristics: most investments are financed from internal sources; reasonable predictions can be made of investment opportunities arising several years ahead; management wishes to take account of the way the allocation will affect other published financial results besides cash flows. A numerical example shows how each allocation affects return on gross assets, current ratio and profit after tax in successive years. These measures are related in a linear programming formulation. The solution demonstrates how particular projects may attract funds by offering ways of altering published results. Related solutions show how the existence and timing of future opportunities affect the optimal current allocation and the value of the programme. Criteria are also developed for whether and when to borrow. It is shown that the returns to incremental borrowing may be much greater than the returns on any available investment considered in isolation, and may fall to zero although profitable single opportunities still exist.