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

1. Investment required: $80,000, present value of future cash flows: $96,000
2. Investment required: $75,000, present value of future cash flows: $120,000
3. Investment required: $100,000, present value of future cash flows: $150,000

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

Select one:

a.3, 1, 2.

b.1, 2, 3.

c.2, 3, 1.

d.2, 1, 3

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

Select one:

True

False