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Find the project profitability index for each investment

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Reference no: EM132591179

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: EM132591179

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