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Exercise 13-5 Preference Ranking [LO13-5] Information on four investment proposals is given below: ...

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Accounting

Exercise 13-5 Preference Ranking [LO13-5]

Information on four investment proposals is given below:

Investment Proposal
A B C D
Investment required $ (130,000 ) $ (140,000 ) $ (150,000 ) $ (1,260,000 )
Present value of cash inflows 185,600 193,800 228,600 1,681,100
Net present value $ 55,600 $ 53,800 $ 78,600 $ 421,100
Life of the project 5 years 7 years 6 years 6 years

Required:

1. Compute the project profitability index for each investment proposal. (Round your answers to 2 decimal places.)

2. Rank the proposals in terms of preference.

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