Information on four investment proposals is given below:

Investment Proposal

A

B

C

D

Investment required

$

(280,000)

$

(140,000)

$

(50,000)

$

(780,000)

Present value of cash inflows

393,900

192,800

78,100

1,038,100

Net present value

$

113,900

$

52,800

$

28,100

$

258,100

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.)

Investment Proposal	Project Profitability Index
A	0.41
B	0.38
C	0.56
D	0.33

2.

Rank the proposals in terms of preference.

.

2.

Rank the proposals in terms of preference.

1

2

3

4

	B C A D
	C A B D
	D C B A
	A B C D