Apex Co Has $100,000 Available for Long-Term Investment

question 114

Multiple Choice

Apex Co. has $100,000 available for long-term investment. Which projects should be selected from the list below? Project Cost IRR NPV Profitability Index
1 $60,000 16% $3,413 1.057
2 40,000 20% 7,563 1.190
3 40,000 24% 8,036 1.201
4 20,000 14% 1,313 1.066
5 60,000 18% 14,583 1.243

• A)4 and 5
• B)2, 3, and 4
• C)3 and 5
• D)2 and 5

---

Definitions:

Fully Depreciated

A status of an asset whose entire cost has been expensed with respect to depreciation, leaving its book value at zero except for salvage value, if any.

Excess Capacity

A situation where a company can produce more goods or services than currently demanded by its market.

Unit Variable Cost

The variable cost associated with producing one unit of a product, including materials, labor, and other costs that vary with production volume.

Special Unit Price

A unique price offered for a product or service, typically different from the standard pricing.