Mutually exclusive and there is no capital rationing

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Reference no: EM132059476

Another separate project has come up. Your boss feels you are overworked and has another analyst do the analysis but wants your opinion on which projects should be undertaken. The other analyst’s projects have the following criteria:

Please answer the following questions:

1. If all investments are mutually exclusive and there is no capital rationing, which project should the company undertake and why?

2. If the projects are independent and there is no capital constraint, which project(s) should the company undertake and why?

Project #1

Net Initial Investment: 1,495,000

Payback: 3.1

NPV: 120,000

PI: 1.01

IRR: 13.02%

Project #2

Net Initial Investment: 680,000

Payback: 4.1

NPV: 64,000

PI: 1.30

IRR: 15.02%

Project #3

Net Initial Investment: 500,000

Payback: 6.1

NPV: -25,000

PI: 0.89

IRR: 11.02%

Project #4

Net Initial Investment: 450,000

Payback: 3.1

NPV: 100

PI: 1.001

IRR: 13.01%

Reference no: EM132059476

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