Explain evaluation of investment proposal by profitability

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Reference no: EM1313659

Explain Evaluation of Investment proposal through Profitability Index

Information on four investment proposals is given below-

Proposal Investment Net Present

Number Required Value

1 $ 8,000 $ 3,200

2 $ 12,000 $ 3,600

3 $ 10,000 $ 2,500

4 $ 4,000 $ 2,000

Rank the proposals in terms of preference using the project profitability index:

a. 3, 2, 1, 4

b. 2, 3, 1, 4

c. 2, 1, 3, 4

d. 4, 1, 2, 3

Reference no: EM1313659

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