The Deta Company Is Analyzing Projects X, Y, and Z

question 3

Multiple Choice

The Deta Company is analyzing projects X, Y, and Z as possible investment opportunities. Each of these projects has a useful life of six years. The following information has been obtained: $\begin{array}{lrr}&\text { Project X} &\text { Project Y} &\text { Project Z} \\\\ \text { Initial investment needed. } &£ 260,000 & £ 180,000 & £ 340,000\\ \text { Present value of future cash inflows.} &£ 295,000 & £ 220,000 & £ 390,000 \\ \text { Internal rate of return.} &20 \% & 16 \% & 18 \%\\\end{array}$

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Which project has the highest ranking according to the net present value and the profitability index criteria
$\begin{array}{lrr} \text {Net Present Value } &\text { Protitability Index } \\\end{array}$

A. $\begin{array}{lrr}&&& \text { Z } &&&&&&&\text { Z} &\\\end{array}$

B. $\begin{array}{lrr} &&& \text { Y } &&&&&&&\text { X } &\\\end{array}$


C. $\begin{array}{lrr} &&& \text {X } &&&&&&&\text {Y } &\\\end{array}$


D. $\begin{array}{lrr} &&& \text {Z } &&&&&&&\text { Y} &\\\end{array}$

• A)Option A
• B)Option B
• C)Option C
• D)Option D

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Definitions:

Sensation

The initial process of detecting and encoding environmental energy (e.g., light, sound) through the sensory organs.

Blue

A color, part of the visual spectrum, that is perceived when light has a dominant wavelength of roughly 450 to 495 nanometers.

Green

Often associated with the color representing nature, growth, renewal, and environmental sustainability.

Trichromatic Theory

A theory of color vision that suggests our eyes can perceive color because they can detect three different wavelengths of light corresponding to red, green, and blue.