Phoebe Corporation is evaluating four capital investment projects. It uses a 14% hurdle rate and has computed the following for each of the four projects: Project 1Project 2Project 3Project 4Cost200,000300,000240000270000Net Present Value-11485-9255113255710Profitability Index94%97%105%102%1.Assuming that Phoebe has no budget restrictions, which project/s should it undertake?2. Which project should Phoebe Corporation undertake if it has only P300,000 of funds available?3.

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Answered: Phoebe Corporation is evaluating four…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Phoebe Corporation is evaluating four capital investment projects. It uses a 14% hurdle rate and has computed the following for each of the four projects:

	Project 1	Project 2	Project 3	Project 4
Cost	200,000	300,000	240000	270000
Net Present Value	-11485	-9255	11325	5710
Profitability Index	94%	97%	105%	102%

1.Assuming that Phoebe has no budget restrictions, which project/s should it undertake?

2. Which project should Phoebe Corporation undertake if it has only P300,000 of funds available?

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