Question: The following table contains information about four projects in which Orion Corporation has the opportunity to invest. This information is based on estimates that different
The following table contains information about four projects in which Orion Corporation has the opportunity to invest. This information is based on estimates that different managers have prepared about the company's potential project.
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Requirements
1. Rank the four projects in order of preference by using the
a. net present value.
b. project profitability index.
c. internal rate of return.
d. payback period.
e. accounting rate of return.
2. Which method(s) do you think is best for evaluating capital investment projects in general? Why?
Investment Net Present Internal Rate of Return Profitability Payback Period Accounting Rate of Return Life of Value in Years 2.82 Project A. Required $ 220,000 $ 61,190 $ 410,000 $ 37,744 $1,030,000 $191,498 $1,545,000 Project Index 1.28 20% 14% 23% 22% 1.09 3.20 3 1.19 13% 18% 2.17 $ 52,680 12% 1.03 24% 3.07 4 B.
Step by Step Solution
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