A company faces the following investment alternativesProject Capital Investment. Cash Flows from InvestmentI. $7 million. $1.2 million per year in perpetuityII. $12 million. $1.5 million per year in perpetuityIII. $16 million. $2.2 million per year in perpetuityIV. $10 million. $1.4 million per year in perpetuityV. $11 million. $1.6 million per year in perpetuityIf 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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