Question 10 Ryner Corporation is considering three investment projects: S, T, an

Question

Question 10 Ryner Corporation is considering three investment projects: S, T, and U. Project S would require an investment of $20,000, Project T of $69,000, and Project U of $83,000. No other cash outflows would be involved. The present value of the cash inflows would be $23,200 for Project S, $77,970 for Project T, and $94,620 for Project U. Rank the projects according to the profitability index, from most profitable to least profitable. (Ignore income taxes.)

a.) U, T, S

b.) T, S, U

c.) U, S, T

d.) S, U, T

Explanation / Answer

PI=Present value of inflows/Present value of outflows

Hence the ranking would be S,U,T(D).

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