Question: A company is considering pursuing several projects, for which the net present value (NPV), profitability index (PI), and internal rate of return (IRR) are presented

  1. A company is considering pursuing several projects, for which the net present value (NPV), profitability index (PI), and internal rate of return (IRR) are presented in the table below. The firm has a total of $100,000 to spend on these projects.

Project Cost NPV PI IRR

A $50,000 $10,000 2.5 15%

B $80,000 $50,000 1.5 9%

C $30,000 $5,000 2 18%

D $15,000 $2,500 2.2 12%

What is the best choice?

  1. Pursue project B and D
  2. None of the above
  3. Pursue project B only
  4. Pursue project A only
  5. Purse projects A and C

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