The following table contains information about four projects in which X Corporation has the opportunity to invest. This information is based on estimates that different managers have prepared about the company's potential project.

Project	Investment Required	Net Present Value	Life of Project	Internal Rate of Return	Profitability Index	Payback Period in Years	Accounting Rate of Return
A	$ 226,000	$ 36,908	5	21%	1.17	2.97	20%
B	$ 406,000	$ 50,740	6	24%	1.13	3.13	15%
C	$1,040,000	$152,325	3	19%	1.16	2.18	14%
D	$1,630,000	$ 19,870	4	14%	1.02	3.00	23%

 

Part 1: Rank the four projects in order of preference by using the following table:

	(a) Net Present Value	(b) Profitability Index	(c) Internal Rate of Return	(d) Payback Period	(e) Average Rate of Return
1st preferred	Project A, B, C, or D?
2nd preferred
3rd preferred
4th preferred

 

Part 2: discussing the usefulness of capital investment techniques (net present value, profitability index, internal rate of return, payback period, and average rate of return) in selecting the four alternative investment opportunities in part 1.

Answer rating: 100% (QA)

To rank the projects in order of preference we can consider various investment evaluation criteria s... View the full answer