Question: Your boss is comparing 3 mutually exclusive projects with the following characteristics: Project #1 Project #2 Project #3 Net Present Value $250 $310 $280 Internal

Your boss is comparing 3 mutually exclusive projects with the following characteristics:

Project #1 Project #2 Project #3
Net Present Value $250 $310 $280
Internal Rate of Return 12.53% 8.03% 11.09%
Profitability Index 2.50 0.80 1.96
Payback period 4.5 years 4.5 years 2.6 years

The required payback period is 5 years, and the required return is 9%.

QUESTION: Based on all of the above information, which project would you recommend your boss to accept?

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