The following table contains information about four projects in which Hughes Corporation has the opportunity to invest. This information is based on estimates that different managers have prepared about their potential project.
Click the icon to view the projects information.
Requirements
Rank the four projects in order of preference by using the
a net present value.
b project profitability index.
c internal rate of return.
d payback period.
e accounting rate of return.
Which methods do you think is best for evaluating capital investment projects in general? Why?
Requirement Rank the projects in order of preference.
Requirement Select the method that corresponds to the appropriate explanation.
: This method helps to compare the NPV across alternative investments of varying sizes.
other words, it is the interest rate which brings the investment's NPV to zero.
for accepting capital investments since it does not give the company any insight about the investment's profitability. Additionally, it does not incorporate the time value of money.
accounting figures. Therefore it will help the company assess the impact of investments on the financial statements. The other methods use net cash flows.
: Data Table
