Question: A company has 4 projects for for consecutive 9 years as shown below. investment plan I II III IV Initial Investment ($) 60000 68000 99000

A company has 4 projects for for consecutive 9 years as shown below.

investment plan

I

II

III

IV

Initial Investment

($)

60000

68000

99000

116000

Annual Cash inflow

($)

19000

30000

35000

37000

What is the best project and decide the ranking based on the methods of profitability below.

  1. ARR:Average rate of return.
  2. PBP: Payback period.
  3. Net Present value at discounting rate at 8%
  4. Benefit to cost ratio at discounting rate at 11%
  5. Internal rate of return for range of suitable discounting rate

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