Question
Information on four investment proposals is given below: Investment Proposal A B C D Investment required $ (85,000) $ (200,000) $ (90,000) $ (170,000) Present
Information on four investment proposals is given below:
| Investment Proposal | ||||||||
| A | B | C | D | |||||
| Investment required | $ | (85,000) | $ | (200,000) | $ | (90,000) | $ | (170,000) |
| Present value of cash inflows | 119,000 | 250,000 | 135,000 | 221,000 | ||||
| | | | | | | | | |
| Net present value | $ | 34,000 | $ | 50,000 | $ | 45,000 | $ | 51,000 |
| | | | | | | | | |
| 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.) |
| Proposal | Project Profitability Index |
| A | |
| B | |
| C | |
| D | |
| | |
| 2. | Rank the proposals in terms of preference. | ||||||||
|
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Primary English Audit And Test Assessing Your Knowledge And Understanding
Authors: Doreen Challen
2nd Edition
190330086X, 978-1903300862
