A company has four projects it wishes to undertake. Which of these investments should be the lowest priority, given a discount rate of 5%?
Project Capital Investment Cash Flows from Investment
I $7 million $1.2 million per year in perpetuity
II $12 million $1.5 million per year in perpetuity
III $16 million $2.2 million per year in perpetuity
IV $10 million $1.4 million per year in perpetuity
A) Project I
B) Project II
C) Project III
D) Project IV
Answer: B
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