Question
Hiroshi Inc. is evaluating 3 investment alternatives. Each alternative requires an initial investment cash outflow of $176,000 and is to be depreciated on a straight-line
Hiroshi Inc. is evaluating 3 investment alternatives. Each alternative requires an initial investment cash outflow of $176,000 and is to be depreciated on a straight-line basis ($6,000 salvage value). Ignore income taxes. Cash flows for the various investments are summarized below: Project A Project B Project C Year 1 $87,000 $52,600 $0 Year 2 $78,000 $52,600 $0 Year 3 $65,000 $52,600 $89,000 Year 4 $4,000 $52,600 $97,000 Year 5 $2,000 $52,600 $109,000 The company has a required rate of return of 11.2% Required: a. rank each alternative based on NPV b. rank each alternative based on IRR c. rank each alternative based on accrual accounting rate of return using average annual cash flows d. evaluate each project based on the payback periods
I have done the work and got the correct answers. I am just not sure how to rank them each (highest to lowest etc.) based on what the question is asking IRR, AARR, NPV or Payback
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