Question
Mountain Manufacturing is considering the following capital investment proposals.Mountain's requirement criteria include a maximum payback period of five years and a required rate of return
Mountain Manufacturing is considering the following capital investment proposals.Mountain's requirement criteria include a maximum payback period of five years and a required rate of return of12.5%. Determine if each investment is acceptable or should be rejected(ignore qualitativefactors). Rank the acceptable investments in order from most desirable to least desirable.
Project Payback NPV IRR Profitability Index
A 3.15 years $ 10,250 13.0% 1.54
B 4.20 years $ 42,226 14.2% 1.92
C 2.00 years $ (10,874) 8.5% 0.75
D 3.25 years $ 36,251 14.0% 2.86
E 5 years $ 0 12.5% 1
Determine if each investment is acceptable or should be rejected(ignore qualitativefactors).
Rank the acceptable investments in order from most desirable to least desirable. Acceptable investments are those which are not rejected by any of the capital budgeting methods.
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