Question: Google evaluates three projects: Project A ($10,000,000 initial investment, NPV $2,000,000), Project B ($8,000,000 initial investment, NPV $1,500,000), Project C ($12,000,000 initial investment, NPV $3,000,000).

  1. Google evaluates three projects: Project A ($10,000,000 initial investment, NPV $2,000,000), Project B ($8,000,000 initial investment, NPV $1,500,000), Project C ($12,000,000 initial investment, NPV $3,000,000).
    • Requirements:
      • Rank projects using the profitability index.
      • Determine the optimal capital budget given a constraint.
      • Calculate the equivalent annual cost for each project.
      • Recommend the project(s) to be accepted based on financial analysis.

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