Rank the projects from the largest Pl to the smallest: (Click on the to copy the

Question

Rank the projects from the largest Pl to the smallest: (Click on the to copy the table to a spreadsheet.) Project Net Investment PV (Cash Inflows) NPV $401 730 189 1,030 206 712 238 900 - 18 -130 The profitability index for project A is (Round to two decimal places.) The profitability index for project B is (Round to two decimal places.) The profitability index for project C is . (Round to two decimal places.) The profitability index for project D is(Round to two dedimal places.) The profitability index for project EisD (Round to two decimal places.) Rank from largest to smallest PI below: C # 1 Project | Largest Pl.

Explanation / Answer

Profitability Index = PV of Cash Flows/Net Investment

Project A: PI = 432/401 = 1.08

Project B: PI = 712/730 = 0.98

Project C: PI = 238/189 = 1.26

Project D: PI = 900/1030 = 0.87

Project E: PI = 232/206 = 1.13

Rank: C>E>A>B>D

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