I think question 3 is incorrect. The profitability index numbers show the order of projects we would like to invest in is B, A, C, D. The total amount we have available for investment would cover all of projects B, A, C and so D would be left out. So why does the answer state that we would miss out on C and complete 75% of D instead. Am I missing something?

chimporera says

Question 3 required me to pay attention to detail-consider NPV not PV.

bigbird says

I think question 3 is incorrect.

The profitability index numbers show the order of projects we would like to invest in is B, A, C, D. The total amount we have available for investment would cover all of projects B, A, C and so D would be left out. So why does the answer state that we would miss out on C and complete 75% of D instead. Am I missing something?

darsh123 says

Should the answer be 710,000 when choosing QQ and RR?

horizon856 says

Yes you are right

bigbird says

No. The NPV that is required is the total inflows less total investment 710,000 – 345,000 = 365,000