You are given the following information in the table.

 

Year	0	1	2	3	4
	($ million)	($million)	($million)	($million)	($million)
Project X	-I0	4	4	3	3
Project Y	-10	2	2	6	6
Project Z	-20	7	8	8	6

 

The company is subject to capital rationing, and the company's capital budget is limited to $20 million for the year. The company is unable to defer any of the projects. The cost of capital is 12%.

Required

1. The payback period for each project
2. The NPV for each project
3. The IRR for each project

Select the best project(s) for the company, assuming that the company is subject to stringent capital rationing.

Answer rating: 100% (QA)

Here are the calculations Payback period Project X 25 years recovered in ye... View the full answer