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Exercise 12-5 (Algo) Preference Ranking (LO12-5] Information on four investment proposals is given below. Investment Proposal A B Investment required Present value of cash inflows
Exercise 12-5 (Algo) Preference Ranking (LO12-5] Information on four investment proposals is given below. Investment Proposal A B Investment required Present value of cash inflows Net present value $ (300,000) 424,800 $ 124,800 $ (140,000) 191,700 $51,700 Life of the project 5 years: 7 years Required: C $ (100,000) 151,100 $51,100 6 years D $ (1,500,000) 2,001,700 $ 501,700 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 Rank Preference A B C D
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