Information on four investment proposals is given below: A B Investment required Present value of cash...

Transcribed Image Text:

Information on four investment proposals is given below: A B Investment required Present value of cash inflows $ (60,000) 86,600 $ (130,000) 181,100 Investment Proposal C $ (140,000) 213,900 Net present value $ 26,600 $ 51,100 $ 73,900 Life of the project 5 years 7 years 6 years Required: D $ (2,100,000) 2,803,200 $ 703,200 6 years 1. Compute the profitability index for each investment proposal. (Round your answers to 2 decimal places.) 2. Rank the proposals in terms of preference. Investment Profitability Proposal Index Rank Preference A B C D Information on four investment proposals is given below: A B Investment required Present value of cash inflows $ (60,000) 86,600 $ (130,000) 181,100 Investment Proposal C $ (140,000) 213,900 Net present value $ 26,600 $ 51,100 $ 73,900 Life of the project 5 years 7 years 6 years Required: D $ (2,100,000) 2,803,200 $ 703,200 6 years 1. Compute the profitability index for each investment proposal. (Round your answers to 2 decimal places.) 2. Rank the proposals in terms of preference. Investment Profitability Proposal Index Rank Preference A B C D