Management of Last Call Inc. is considering the following capital projects

Assume that all projects have no salvage value and that the company uses a discount rate of 10 percent. Management has decided that no more than \(\$ 6,000,000\) can be spent in the current year for capital projects.

a. Determine the net present value, profitability index, and internal rate of return for each of the six

b. Rank the six projects according to each method used in (a).

c. Indicate how you would suggest to the management of the company that the funds be spent.

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Project MOON A. Cost $2,000,000 B. 3,000,000 Annual After-Tax Cash Flow Number of Years $400,000 560,000 15 C. 4,000,000 560,000 D. E. 3,500,000 500,000 2,400,000 425,000 15 50405 9 14 20 F....... 800,000 220,000 8