### Investment alternatives

Assignment Help Finance Basics
##### Reference no: EM131013727

A company faces the following investment alternatives

Project          Capital Investment.         Cash Flows from Investment

I.                      \$7 million.                        \$1.2 million per year in perpetuity

II.                     \$12 million.                      \$1.5 million per year in perpetuity

III.                     \$16 million.                     \$2.2 million per year in perpetuity

IV.                    \$10 million.                      \$1.4 million per year in perpetuity

V.                     \$11 million.                      \$1.6 million per year in perpetuity

If the company's budget is \$30 million, use the profitability index to determine the best combination of investments, given a cost of capital of 5 percent.

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