21. A new associate at a corporation is tasked with ranking various projects for the CEO's approval. The associate decides to rank the projects based on the IRR, NPV, and PI, as indicated in the following table: What is the correct ranking of the projects from most valuable to least valuable?
Answer: D
Project A ranks as the most valuable, followed by Project D, Project C, and finally Project B.
The ranking of the projects based on their value is determined by evaluating their Internal Rate of Return (IRR), Net Present Value (NPV), and Profitability Index (PI). According to the analysis, Project A holds the highest value, making it the top choice, followed by Project D, Project C, and Project B.
A) Project C, Project A, Project B, Project D
This option incorrectly places Project C at the top, which is not supported by the evaluations of IRR, NPV, and PI. The ranking fails to recognize Project A as the most valuable project, thus making this option incorrect.
B) Project B, Project C, Project D, Project A
This ranking inaccurately positions Project B as the most valuable project, which contradicts the analysis. Project A should be ranked highest, rendering this option incorrect.
C) Project D, Project B, Project A, Project C
While this option places Project D higher, it misplaces Project A by ranking it third. This does not align with the determined values, making this option incorrect.
D) Project A, Project D, Project C, Project B
This ranking accurately reflects the project valuations, with Project A being the most valuable, followed by Project D, then Project C, and finally Project B. This option correctly represents the hierarchy based on the provided analysis.
Conclusion
The correct ranking is essential for effective project evaluation and decision-making. Option D correctly positions Project A as the most valuable, based on the applicable financial metrics, while all other options fail to recognize the accurate value assessments of the projects involved. Thus, Option D is the definitive answer.