Information on four investment proposals is given below: ...
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Accounting
| Information on four investment proposals is given below: |
| Investment Proposal | ||||||||
| A | B | C | D | |||||
| Investment required | $ | (300,000) | $ | (140,000) | $ | (100,000) | $ | (1,500,000) |
| Present value of cash inflows | 424,800 | 191,700 | 151,100 | 2,001,700 | ||||
| Net present value | $ | 124,800 | $ | 51,700 | $ | 51,100 | $ | 501,700 |
| 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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