E11-12 Ranking Capital Investment Projects Using Different Criteria [LO 11-2, 11-3, 11-5, 11-6]

Jill Harrington, a manager at Jennings Company, is considering several potential capital investment projects. Data on these projects follow:

	Project X		Project Y		Project Z
Initial investment		$40,000		$20,000		$50,000
Annual cash inflows		25,000		10,000		25,400
PV of cash inflows		45,000		33,000		70,000

Required: 1. Compute the payback period for each project and rank order them based on this criterion. (Round your answers to 2 decimal places.) 2. Compute the NPV of each project and rank order them based on this criterion. 3. Compute the profitability index of each project and rank order them based on this criterion. (Round your answers to 2 decimal places.) 4. If Jennings has limited funds to invest, which ranking should Jill recommend?

	Payback Ranking
	Profitability Index Ranking
	NPV Ranking