Shaylee Corp has $2.20 million to invest in new projects. The company\'s manager

Question

Shaylee Corp has $2.20 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 C Project D S 740,000 S 420,000 S 980,000 S 1,135,000 510,000 1,750,000 1,210,000 955,000 Required: 1. Is Shaylee able to invest in all of these projects simultaneously? O No O Yes 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 profitablity Index? Rank Project A Project B Project C Project D

Explanation / Answer

1 No 2a Profitability index Project A 1.2905 =955000/740000 Project B 1.2143 =510000/420000 Project C 1.7857 =1750000/980000 Project D 1.0661 =1210000/1135000 b Rank Project A 2 Project B 3 Project C 1 Project D 4

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