Vacation Properties LLC is evaluating 6 real estate projects. Management plans to buy properties today and sell them 5 years from today. The following table summarizes the costs and expected sales in year 5 from each property.

Vacation Properties has a budget of $18,000,000 to invest into properties.

a. What is the IRR of each investment?

b. What is the NPV of each investment?

c. What is the profitability index of each investment?

d. Given its budget of $18 million, which properties should Vacation Properties purchase now?

e. If Vacation Properties budget was $12 million, which properties should the company purchase now?

Property Cost Today Discount Rate Expected Sales in Year 5 Mountain Ridge $ 3,000,000 15% $ 18,000,000 Ocean Park $ 15,000,000 15% $ 75,500,000 Lakeview $ 9,000,000 15% $ 50,000,000 Seabreeze $ 6,000,000 8% $ 35,500,000 Green Hills $ 3,000,000 8% $ 10,000,000 West Ranch $ 9,000,000 8% $ 46,500,000