Question
Information on four investment proposals is given below: Investment Proposal A B C D Investment required $ (360,000 ) $ (50,000 ) $ (140,000 )
Information on four investment proposals is given below:
| Investment Proposal | ||||||||||||
| A | B | C | D | |||||||||
| Investment required | $ | (360,000 | ) | $ | (50,000 | ) | $ | (140,000 | ) | $ | (840,000 | ) |
| Present value of cash inflows | 506,900 | 67,600 | 214,300 | 1,121,400 | ||||||||
| Net present value | $ | 146,900 | $ | 17,600 | $ | 74,300 | $ | 281,400 | ||||
| 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.
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Core Concepts Of Accounting Information Systems
Authors: Nancy A. Bagranoff, Mark G. Simkin, Carolyn Strand Norman
11th Edition
9780470507025, 0470507020
