Evaluation of several proposals Gronly owns a small office building that has consider- able customer traffic. His cost of capital is 15 percent. It occurred to him that some vending machines in the building might prove profitable. He obtains the following cash outflow and inflow data from companies that are willing to provide and service various combinations of vending machines.

REQUIRED

a. Compute the payback on each project.

b. Compute the net present value on each project.

c. Compute the profitability index on each project.

d. Compute the internal rate of return on each project to the nearest whole percentage.

e. Rank the projects in order of preference using each of the evaluation methods.
Computer requirement Gronly financed its building with a variable rate mortgage. The company was just notified of a significant increase in its mortgage interest rate. This and some other changes in capital caused by debt refunding has increase the firm's cost of capital to 15 percent.

f. Use the new information, where relevant, to modify any of your analysis in requirements

a- e above.

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Year 1234 Vendor A Vendor B Vendor C Vendor D ($64,325) ($71,130) ($96,700) ($89,000) 15,000 15,000 19,500 17,500 15,000 15,000 19,500 17,500 15,000 15,000 19,500 17,500 5 15,000 15,000 19,500 17,500 6 15,000 15,000 19,500 17,500 7 15,000 15,000 19,500 17,500 8 15,000 15,000 19,500 17,500 9 0 15,000 19,500 37,500 10 0 15,000 19,500 0 11 0 21,000 19,500 0 12 0 0 19,500 0