The following table contains information about four potential investment projects that Castle Corporation is considering.

Required:

1. Rank the four projects in order of preference by using:

a. Accounting rate of return.

b. Payback period.

c. Net present value.

d. Project profitability index.

2. Which method is the best for evaluating the investments? Why?

Transcribed Image Text:

Profitability Payback Required Investment Acctg ROR Project Life Project Period NPV Index 1.13 1.08 1.21 $ 62,250 $ 63,562 9% 16% 12.5% 7.2% 3.2 2.8 2.5 3.1 $ 750,000 $1,000,000 $1,500,000 4 $214.920 $244.258 1.16