. Investors, Inc. uses a 12% hurdle rate for all capital expenditures and has done the following analysis for four projects for the upcoming year:

Project 1 Project 2 Project 3 Project 4

Initial cash outlay P200,000 P298,000 P248,000 P272,000

Annual net cash inflows

Year 1 P65,000 P100,000 P80,000 P95,000

Year 2 70,000 135,000 95,000 125,000

Year 3 80,000 90,000 90,000 90,000

Year 4 40,000 65,000 80,000 60,000

Net present value (3,798) 4,276 14,064 14,662

Profitability index 98% 101% 106% 105%

Internal rate of return 11% 13% 14% 15%

Which project(s) should Investors, Inc. select during the upcoming year under each budgeted amount of funds?