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 $ 980,000 1,135,000 955,000 510,000 1,750,000 1,210,000 Reqired: 1. Is Shaylee able to invest in all of these projects simultaneously? O No 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 isS Shaylee's order of preference based on the profitability index? Rank Project A Project B Project C Project D

Explanation / Answer

1. No, Shaylee able to invest to all of these project simultaneously.

2. Calculate profitability index :

2b) Rank :

Profitability index Project A 955000/740000 = 1.2905 Project B 510000/420000 = 1.2143 Project C 1750000/980000 = 1.7857 Project D 1210000/1135000 = 1.0661

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