20.00 points Information on four investment proposals is given below: nvestment

Question

20.00 points Information on four investment proposals is given below: nvestment Proposal s (300,000) $(140,000) $(100,000) $(1,500,000) 424,800 191,700 151,100 2,001,700 Investment required Present value of cash inflows Net present value Life of the project 124,800 51,700 51,100 501,700 5 years 7 years 6 years 6 years Required 1. Compute the project profitability index for each investment proposal. (Round your answers to 2 decimal places.) Investment Profitability Project Proposal Index 2. Rank the proposals in terms of preference. DCBA BCAD

Explanation / Answer

Project A Project B Project C Project D Present value of cash inflows 424800 191700 151100 2001700 Investment 300000 140000 100000 1,500,000 Profitability Index 1.42 1.37 1.51 1.33 (Present value of Inflows/ Initial Investment) Project PI Ranking A 1.42 2 B 1.37 3 C 1.51 1 D 1.33 4 Req 2. C A B D

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