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Suppose a company has the following three projects and limits its capital budget to $50000. Projects Present Value of Cash Inflows Initial Investment A $40000

Suppose a company has the following three projects and limits its capital budget to $50000.

Projects

Present Value of Cash Inflows

Initial Investment

A

$40000

$25000

B

37500

25000

C

70000

50000

  1. Calculate the projects net present values (NPVs).
  2. Calculate the projects profitability indexes (PIs).
  3. Which project(s) should the company choose? Why?

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