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How would you rank the investment proposals

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Reference no: EM133041593

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Q1) A company is considering the following three investment proposals:

Investment required: $80,000, present value of future cash flows: $96,000

Investment required: $75,000, present value of future cash flows: $120,000

Investment required: $100,000, present value of future cash flows: $150,000

How would you rank the above investment proposals using profitability index method?

a. 3, 1, 2.

b. 1, 2, 3.

c. 2, 3, 1.

d. 2, 1, 3

Q2) The higher a firm's cost of capital, all else being equal, the higher the total valuation of the firm.

True

False

Reference no: EM133041593

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