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Information on four investment proposals is given below: Investment Proposal ...

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Question

Accounting

Information on four investment proposals is given below:

Investment Proposal
A B C D
Investment required $ (430,000) $ (70,000) $ (80,000) $ (2,850,000)
Present value of cash inflows 633,500 98,700 124,400 3,804,200
Net present value $ 203,500 $ 28,700 $ 44,400 $ 954,200
Life of the project 5 years 7 years 6 years 6 years

Required:

1. Compute the 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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