Capital Invest, Inc

Capital Invest, Inc. uses a 12% hurdle rate for all capital expenditures and has done the following analysis for four projects for the upcoming year: Project 1 Project 2 Project 3 Project 4
Initial capital outlay $200,000 $298,000 $248,000 $272,000
Annual cash inflows:
Year 1 $65,000 $100,000 $880,000 $95,000
Year 2 70,000 135,000 95,000 125,000
Year 3 80,000 90,000 90,000 90,000
Year 4 40,000 65,000 80,000 60,000
Net present value (3,789) 4,276 14,064 14,662
Profitability Index 0.98 1.01 1.06 1.05
Internal rate of return 11% 13% 14% 15%
CMA) Which project(s) should Capital Invest, Inc. undertake during the upcoming year if it has only $600,000 of funds available?

A) Projects 1 and 3
B) Projects 2, 3, and 4
C) Projects 2 and 3
D) Projects 3 and 4.