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As Financial Manager, you have a budget of $1,000,000.
You have the following projects, use the Profitability Index (PI) criteria to accept or reject these projects.
Calculate the PI then Rank the projects as per the decreasing PI
| Project | Investment ($) | PV ($) | PI |
| C | 500,000 | 590,000 | ? |
| D | 140,000 | 122,000 | ? |
| E | 200,000 | 230,000 | ? |
| A | 620,000 | 660,000 | ? |
| B | 300,000 | 405,000 | ? |
1) The PI of the first-ranked project is
2) Under the budget constraint, how many projects you would accept?
3) The last ranked project has a positive PI for that we accept it (True, False)
4) When you rank the projects as per the PI, you will find the following order:
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