Answer (D) is correct . Given that $300,000 is available and that each project costs $200,000 or more, only one project can be undertaken. Because Project 3 has a positive NPV and the highest profitability index, it is the best investment. The high profitability index means that the company will achieve the highest NPV per dollar of investment with Project 3. The profitability index facilitates comparison of different-sized investments.
actually the project 4 is the most profitable,but it is not contained in the selection, so we have to select D.
Answer (A) is incorrect because Project 1 has a negative NPV.
Answer (B) is incorrect because Choosing more than one project violates the $300,000 limitation.
Answer (C) is incorrect because Choosing more than one project violates the $300,000 limitation.
Which project(s) should Capital Invest undertake during the upcoming year if it has only $300,000 of capital funds available?