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Exercise 12-5 (Algo) Preference Ranking [LO12-5] Information on four investment proposals is given below: B Investment Proposal $ (170,000) 259,300 $ 89,300 Investment required Present
Exercise 12-5 (Algo) Preference Ranking [LO12-5] Information on four investment proposals is given below: B Investment Proposal $ (170,000) 259,300 $ 89,300 Investment required Present value of cash inflows Net present value $ (190,000) 267,400 $ 77,400 $ (180,000) 249,400 $ 69,400 Life of the project 5 years 7 Required: 6 years 1. Compute the profitability index for each investment proposal. (Round your answers to 2 decimal places.) 2. Rank the proposals in terms of preference. Investment Profitability Proposal Index A B C D Rank Preference D $ (900,000) 1,197,500 $297,500 6
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