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Compute the project profitability index for each investment

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Reference no: EM13509053

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 inflows
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:

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

Proposal Project
Profitability
Index
A
B
C
D

 

2.

Rank the proposals in terms of preference.




A B C D

D C B A

C A D B

B C A D

 

Reference no: EM13509053

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