Exercise 12-5 Preference Ranking [LO12-5]

Information on four investment proposals is given below:

		Investment Proposal
	A			B			C			D
Investment required	$	(720,000	)	$	(160,000	)	$	(130,000	)	$	(1,560,000	)
Present value of cash inflows		1,013,000			221,800			198,900			2,081,400
Net present value	$	293,000		$	61,800		$	68,900		$	521,400
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.