***Please note, I need this done within the next 3 hours.
all answers have to be explained. If you are using sources, Please correctly cite each source. all answers will be checked for plagerism.
- Ranking Investment Alternatives
(Problem 10-41) Grosvenor Industries has designated $1.2 million for capital investment expenditures during the upcoming year. Its cost of capital is 14 percent. Any unused funds will earn the cost of capital rate. The following investment opportunities along with their required investment and estimated net present values have been identified:
Project Net Investment NPV Project Net Investment NPV
A $200,000 $22,000 F $250,000 $30,000
B 275,000 21,000 G 100,000 7,000
C 150,000 6,000 H 200,000 18,000
D 190,000 (19,000) I 210,000 4,000
E 500,000 40,000 J 250,000 35,000
In your response, complete the following:
1. Rank the projects using the profitability index. Considering the limit on funds available, which projects should be accepted?
2. Using the NPV, which projects should be accepted, considering the limit on funds available?
3. If the available investment funds are reduced to only $1,000,000:
(a) Does the list of accepted projects change from Part 2?
(b) What is the opportunity cost of the eliminated $200,000
Answer all questions with full explanations.