QLL Inc. is expanding rapidly and has the opportunity to invest in four projects. The forecast cashflows for each project are as follows:

Year Project 1 Project 2 Project 3 Project 4

0 (500) (400) (300) (100)

1 300 150 120 60

2 200 170 200 45

3 150 90 90 25

QLL has a cost of capital of 12% and an investment budget for the year of $600.

Required:

a. calculate the NPV and profitability index for each project

b. Which project(s) should QLL undertake, assuming all projects are divisible?

c. Which project(s) should QLL undertake, assuming all projects are non-divisible?

d. Which project(s) should QLL undertake, assuming all projects are divisible but Projects 3 and 4 are mutually exclusive?