Rank these five projects in the descending order of

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Rand Corporation is considering five different investment opportunities. The company's cost of capital is 12 percent. Data on these opportunities under consideration are given below.

Project

Investment ($)

PV at 12% ($)

NPV ($)

IRR (%)

Profitability Index

(Rounded)

1

35,000

39,325

4,325

16

1.12

2

20,000

22,930

2,930

15

1.15

3

25,000

27,453

2,453

14

1.10

4

10,000

10,854

854

18

1.09

5

9,000

8,749

(251)

11

0.97

Based on these data: (a) rank these five projects in the descending order of preference, according to NPV, IRR, and profitability index (or benefit/cost ratio). (b) Which ranking would you prefer? (c) Based on your answer to part (b), which projects would you select if $55,000 is the limit to be spent?'

Reference no: EM13574606

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