Please Review the Information on 4 Potential Investments -
Under Conditions of Capital Rationing, Which Project Would Be

question 98

Multiple Choice

Please review the information on 4 potential investments:
$\begin{array}{|r|r|r|r|r|}\hline&\text { Project A }&\text { Project B }&\text { Project C }&\text { Project D }\\\hline \text { Initial investment } & \$ 200,000 & \$ 250,000 & \$ 300,000 & \$ 90,000 \\\hline \text { PV of cash inflows } & \$ 285,000 & \$ 295,000 & \$ 420,000 & \$ 94,000 \\\hline \text { Payback period (years) } & 7.2 & 6.0 & 9.5 & 2.0 \\\hline \text { NPV of project } & \$ 85,000 & \$ 45,000 & \$ 120,000 & \$ 4,000 \\\hline \text { Profitability inclex } & 1.43 & 1.18 & 1.40 & 1.04\\\hline \end{array}$
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Under conditions of capital rationing, which project would be favored?

• A) Project A
• B) Project B
• C) Project C
• D) Project D

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Definitions:

Exculpatory Clause

A provision in a contract that absolves one party from liability for their own negligence or wrongdoing.

Liability

Obligation or liability for one's actions or debts.

Tortious Conduct

Actions carried out by an individual or entity that cause harm or loss to another, leading to civil legal liability.

Public Officer

An individual holding a position of authority in a governmental organization, bound by official duties.