Information on four investment proposals is provided below:

Required:

1. Compute the profitability index for each investment proposal.

2. Rank the proposals in terms of preference.

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Investment Proposal в Investment required $(45,000) $(50,000) $(35,000) $(60,000) Present value of cash inflows 80,000 63.000 45.000 52,500 $ (5,000) Net present value $ 17,500 $ 20,000 $ 18,000 Life of the project 5 years 7 years 6 years 6 years