Shaylee Corp has S2.40 million to invest in new projects. The company\'s manager

Question

Shaylee Corp has S2.40 million to invest in new projects. The company's managers have presented a number of possible options that the board must prioritize. Information about the projects follows: Initial investment Present value of future cash flows Project A Project B Project CProject D S 680,000 S360.000 S 920.000 1,075.000 480.000 1.450.000 1,510,000 895.000 Required: 1. Is Shaylee able to invest in all of these projects simultaneously? O Yes O No 2-a. Calculate the profitablity Index for each project. (Round your answers to 4 decimal places.) Profitability Index Project A Project B Project C Project D 2-b. What Is Shaylee's order of preference based on the profitability Index? Rank Project A Project B Project C Project D

Explanation / Answer

Req 1. Total Investment: Project A 680,000 Project B 360000 Pproject C 920000 Project D 1,075,000 Total Investment: 3035000 Investment in hand 2400000 No, the investment cannot be made in all the projects simultaneouosly. Req 2-a: A B C D Present value of Inflows 895,000 480,000 1,450,000 1,510,000 Divide: Initial Investment 680,000 360,000 920,000 1,075,000 Profitability Index 1.32 1.33 1.58 1.40 (Present value f inflows/ Investment) Req 2-b: Rank Project A IV Project B III Project C I Pproject D II

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