Exercise 11-3 Preference Ranking [LO11-3]

Information on four investment proposals is given below:

		Investment Proposal
	A		B		C		D
Investment required	$	(120,000)	$	(50,000)	$	(50,000)	$	(360,000)
Present value of cash inflows		169,200		67,300		79,000		476,000
Net present value	$	49,200	$	17,300	$	29,000	$	116,000
Life of the project		5 years		7 years		6 years		6 years

Required:
1.	Compute the project profitability index for each investment proposal. (Round your answers to 2 decimal places.)

2.

Rank the proposals in terms of preference.

1.	D C B A
2.	C A B D
3,	B C A D
4.	A B C D