Question
Project A Project B Project C Project D Initial investment $200,000 $250,000 $300,000 $90,000 PV of cash inflows $285,000 $295,000 $420,000 $94,000 Payback period (years)
| Project A | Project B | Project C | Project D | |
| Initial investment | $200,000 | $250,000 | $300,000 | $90,000 |
| PV of cash inflows | $285,000 | $295,000 | $420,000 | $94,000 |
| Payback period (years) | 7.2 | 6.0 | 9.5 | 2.0 |
| NPV of project | $85,000 | $45,000 | $120,000 | $4,000 |
| Profitability index | 1.43 | 1.18 | 1.40 | 1.04 |
Under conditions of capital rationing, which project would be least favored?
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Advanced Accounting Concepts And Practice
Authors: Arnold J. Pahler
9th Edition
0324233531, 978-0324233537
