Exercise 11-3 Preference Ranking [LO11-3]

Information on four investment proposals is given below:

		Investment Proposal
	A		B		C		D
Investment required	$	(390,000)	$	(30,000)	$	(40,000)	$	(600,000)
Present value of cash inflows		551,000		41,000		64,100		800,000
Net present value	$	161,000	$	11,000	$	24,100	$	200,000
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.

	C A B D
	D C B A
	A B C D
	B C A D