The following table contains information about four projects in which Morales Corporation has the opportunity to invest. This information is based on estimates that different managers have prepared about their potential project. E(Click the icon to view the projects information.) Requirements 1. Rank the four projects in order of preference by using the C. internal rate of return. a. net present value. d. payback period. 2. Which method(s) do you think is best for evaluating capital investment projects in general? Why? b. project profitability index. e. accounting rate of return. Requirement 1. Rank the projects in order of preference. (a) (b) (c) (d) (e) Net Present Profitability Internal Rate Payback Accounting Rate Value Index of Return Period of Return 1st preferred C 2nd preferred C 3rd preferred C 4th preferred B

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Chapter15: Capital Investment Analysis
Section: Chapter Questions
Problem 15.3.1P
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The following table contains information about four projects in which Morales Corporation has the opportunity to invest. This
information is based on estimates that different managers have prepared about their potential project.
E (Click the icon to view the projects information.)
Requirements
1. Rank the four projects in order of preference by using the
a. net present value.
d. payback period.
2. Which method(s) do you think is best for evaluating capital investment projects in general? Why?
c. internal rate of return.
b. project profitability index.
e. accounting rate of return.
Requirement 1. Rank the projects in order of preference.
(a)
(b)
(c)
(d)
(e)
Net Present
Profitability
Internal Rate
Payback
Accounting Rate
Value
Index
of Return
Period
of Return
1st preferred
A
C
2nd preferred
3rd preferred
C
4th preferred
ADB
D AB
Transcribed Image Text:The following table contains information about four projects in which Morales Corporation has the opportunity to invest. This information is based on estimates that different managers have prepared about their potential project. E (Click the icon to view the projects information.) Requirements 1. Rank the four projects in order of preference by using the a. net present value. d. payback period. 2. Which method(s) do you think is best for evaluating capital investment projects in general? Why? c. internal rate of return. b. project profitability index. e. accounting rate of return. Requirement 1. Rank the projects in order of preference. (a) (b) (c) (d) (e) Net Present Profitability Internal Rate Payback Accounting Rate Value Index of Return Period of Return 1st preferred A C 2nd preferred 3rd preferred C 4th preferred ADB D AB
Data Table
Payback Accounting
Rate of
Return
Net
Internal
Period in
Profitability
Index
Investment
Present
Life of
Rate of
Project
Required
Value
Project
Return
Years
Project A..... $
210,000 $ 37,176
5.
21%
1.18
2.92
20%
Project B
420,000 $
25,684
22%
1.06
3.13
15%
Project C
$ 1,025,000 $ 133,942
17%
1.13
2.20
13%
Project D..... $ 1,510,000 $ 59,150
12%
1.04
3.05
21%
Print
Done
Transcribed Image Text:Data Table Payback Accounting Rate of Return Net Internal Period in Profitability Index Investment Present Life of Rate of Project Required Value Project Return Years Project A..... $ 210,000 $ 37,176 5. 21% 1.18 2.92 20% Project B 420,000 $ 25,684 22% 1.06 3.13 15% Project C $ 1,025,000 $ 133,942 17% 1.13 2.20 13% Project D..... $ 1,510,000 $ 59,150 12% 1.04 3.05 21% Print Done
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