Information on four investment proposals is given below:

Required:

1.         Compute the project profitability index for each investment proposal.

2.         Rank the proposals in terms of preference.

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Investment Proposal A B D S(90,000) S(100,000) S(70,000) S(120,000) Investment required Present value of cash inflows 126,000 S 36,000 S 38,000 138,000 105,000 S 35,000 160,000 $ 40,000 Net present value Life of the project 6 years 5 years 7 years 6 years