PDQ Inc. has a weighted cost of capital of 14.6% and has an opportunity to invest in the following average risk

projects:

Project Cost Annual Cash Flow Project life

1 $10,000 $1,992.43 10 years

2 $21,000 $4,526.84 8 years

3 $18,500 $4,580.34 7 years

In which projects should PDQ invest? Assume no capital rationing

Question 2Answer

a.
1 and 2 only


b.
Cannot be determined from the information provided


c.
1 and 3 only


d.
2 and 3 only