EXHIBIT 1 Characteristics of Investment Proposals Project A Project B Project C Project D Project E $2,000,000 $750,000 $500,000 $750,000 $500,000 Cost Inflows: (Year) 1 2 3 $488,234 488,234 488,234 488,234 488,234 488,234 4 $195,293 195,293 195,293 195,293 195,293 195,293 195,293 195,293 $100,000 200,000 300,000 400,000 636,528 $184,885 184,865 184,865 184,865 184,865 184,865 184,865 $158,676 158,676 158,676 158,676 158,676 158,676 158,676 158,676 158,676 158,676 5 6 7 8 488,234 488,234 488,234 488,234 9 195,293 10 195,293 QUESTIONS 1. Rank the five projects according to the net present value (NPV) method, inter- nal rate of return (IRR) method, and profitability index (PI) method. 2. What is the correct approach to ranking these projects in a capital rationing situation? Using this approach, which projects would you select? 3. Assume that projects B and D are mutually exclusive, which projects would you adopt