The Lucky Charm Toy Company has been a family run business for the last 15 years. It is well recognized in the state of Indiana for selling educational related toys specifically for children, ages 4 through 10. Once a year, Lucky Toy goes through an extensive analysis as to which new toy they should promote for the upcoming year. They only have room to manufacture one new toy in exchange for dropping the poorest selling toy, automatically, from their product line. Colleen, Kevin, and Elvira June, Market Experts employed by Lucky Toy, have prepared the following information regarding their suggestions as to which toy should be promoted during the upcoming year.

Potential Toys to be considered	Bennie Blocks	Idella Numbers	Donna Efficiency
Initial Investment	$95,000	$118,000	$88,950
Annual Cash Flows	$36,000	$45,000	N/A
Number of Years flow expected to continue	5	6	N/A
Salvage Value	None	$2500	None
Lump Sum Payment	None	None	$118,000 at end of Year 7
Corporate Rate of Return	10 per cent	10 per cent	10 per cent

Answer the Following:

1. Using your new tools for capital budgeting, rank these investment opportunities: 1 = highest, 2 = middle, 3 = lowest. You must show calculations for payback method, NPV, IRR and PI. Show all computations in good form.
2. Support your rankings with sound capital budgeting analysis.