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EXERCISE 13-4 Preference Ranking Information on four investment proposals is given below: Investment Proposal A B C D Investment required . 90,000 100,000 70,000 120,000

EXERCISE 13-4 Preference Ranking Information on four investment proposals is given below: Investment Proposal A B C D Investment required . 90,000 100,000 70,000 120,000 Present value of cash inflows .126,000 138,000 105,000 160,000 Net present value . 36,000 38,000 35,000 40,000 Life of the project . 5 years 7years 6 years 6years Required: 1. Compute the project profitability index for each investment proposal. 2. Rank the proposals in terms of preference

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