Growth Enterprises, Inc. $($GEI$)$ has $$40$ million that it can invest in any or all of the four

capital investment projects, which have cash flows as shown in Table $1$ below.

Table $1$

Comparison of Project Cash Flows' $($$ thousands$)$

Each of these projects is considered to be of equivalent risk. The investment will be

depreciated to zero on a straight$-$line basis for tax purposes. GEI's marginal corporate tax

rate on taxable income is $40\%.$ None of the projects will have any salvage value at the end of

their respective lives. For purposes of analysis, it should be assumed that all cash flows occur

at the end of the year in question.

A$.$ Rank GEI's four projects according to the following four commonly used capital budgeting

criteria:

Payback period.

Accounting return on investment. For purposes of this exercise, the accounting

return on investment should be defined as follows:

Average annual after$-$tax profits

$($Required investment$)/2$

Internal rate of return.

Net present value, assuming alternately a $10\%$ discount rate and a $35\%$ discount

rate.