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A pharmaceutical company developed four investment plans. The initial investment and the corresponding annual cash flows of the four investment plans for consecutive 5 years are shown in the following Table Q1.  Project Name  I  II  III  IV  Initial Investment (OMR)  44000 62000 100000 109000 Annual Cash inflow (OMR)  1000 22000  27000  44000 Identify the best project and decide the ranking based on the following profitability methods.  a) Average rate of return.  b) Payback period.  c) Net Present value with discounting rate at 8%  d) Benefit to cost ratio with discounting rate at 11%  e) Internal rate of return for range of suitable discounting rate

A pharmaceutical company developed four investment plans. The initial investment and the corresponding annual cash flows of the four investment plans for consecutive 5 years are shown in the following Table Q1.  Project Name  I  II  III  IV  Initial Investment (OMR)  44000 62000 100000 109000 Annual Cash inflow (OMR)  1000 22000  27000  44000 Identify the best project and decide the ranking based on the following profitability methods.  a) Average rate of return.  b) Payback period.  c) Net Present value with discounting rate at 8%  d) Benefit to cost ratio with discounting rate at 11%  e) Internal rate of return for range of suitable discounting rate

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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A pharmaceutical company developed four investment plans. The initial investment and the corresponding annual cash flows of the four investment plans for consecutive 5 years are shown in the following Table Q1. 

Project Name 

I 

II 

III 

IV 

Initial Investment (OMR) 

44000

62000

100000

109000

Annual Cash inflow (OMR) 

1000

22000 

27000 

44000

Identify the best project and decide the ranking based on the following profitability methods. 

a) Average rate of return. 

b) Payback period. 

c) Net Present value with discounting rate at 8% 

d) Benefit to cost ratio with discounting rate at 11% 

e) Internal rate of return for range of suitable discounting rate 

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