A company that operates under the constraint of capital rationing has identified seven independent investments from which to choose . The company has £200 000 available for capital investment during the current period . Wh ich proJects should the company choose? The net present values and profitability index ratios for each of the projects are as follows:

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Ranking as per NPVs Ranking as per profitability index 6 2193745 6512473 Present Net Projects Investment required value, present Profitability index, PV/investment PV value cost () () () ABCDEFG 25000 32500 7500 1.30 100000 108 250 8250 1.08 50000 75 750 25 750 1.51 D 100000 123500 23 500 1.23 125000 133 500 8500 1.07 25000 30000 5000 1.20 50000 59 000 9000 1.18