Exercise 7-5 (Algo) Preference Ranking [LO7-5]

Information on four investment proposals is given below:

	Investment Proposal
A	B	C	D
Investment required	$ (300,000)		$ (140,000)		$ (100,000)		$ (1,500,000)
Present value of cash inflows	424,800		191,700		151,100		2,001,700
Net present value	$ 124,800		$ 51,700		$ 51,100		$ 501,700
Life of the project	5	years	7	years	6	years	6	years

Required:

1. Compute the profitability index for each investment proposal.

Note: Round your answers to 2 decimal places.

1. Rank the proposals in terms of preference.