Rana Company has $300,000 to invest and wishes to evaluate the following three projects.

Years X($) Y($) Z($)

0 (3,600,000) (3,600,000) (3,600,000)

1 1,200,000 2,160,000 2,400,000

2 1,200,000 480,000 1,040,000

3 1,200,000 960,000 1,200,000

4 1,200,000 1,440,000

cost of capital 14% 14% 14%

Required:

Which project(s) would you recommend using:

a.Payback Period (PP) in nominal and discounted values.

b.Net Present Value (NPV)

c.Profitability Index (PI)

d. The internal rate of return (IRR) (hint: use 10% for X and 20% for the other projects)