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Compute the project profitability index for each investment

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Reference no: EM132520942

Preference Ranking

Information on four investment proposals is given below:

Investment Proposal

                                               A                 B                        C                   D

Investment required                $(85,000)  $(200,000)    $(90,000)   $(170,000)

Present value of cash flows       119,000       250,000          135,000      221,000

Net present value                      $34,000        $50,000      $45,000        $51,000

Life of the project                      5 years             7 years     6 years         6 years

Required:

Question 1. Compute the project profitability index for each investment proposal.

Question 2. Rank the proposals in terms of preference.

Reference no: EM132520942

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