Task: The following projects are being considered by the Corporate Investment Committee who has an investment budget of $900,000. The budget restriction is for the up front investment in the current year only. The MARR used for the evaluation should be 12%.
1) Which project(s) should be chosen if the discounted payback must be achieved in at least 4 years?
2) Which project(s) should be chosen if internal rate of return period is the criteria for each project?
| Project |
Length of project |
Up Front Investment |
Annual Cost each Year |
Annual Benefits |
| A |
6 |
($250,000) |
($15,000) |
$100,000 |
| B |
4 |
($750,000) |
0 |
$255,000 |
| C |
5 |
($300,000) |
($39,000) |
$130,000 |
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| C |
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