Information on four investment proposals is given below: Investment Proposal A B C D Investment required $ (60,000) $ (70,000) $ (40,000) $ (990,000) Present value of cash inflows 88,000 97,300 64,200 1,318,700 Net present value $ 28,000 $ 27,300 $ 24,200 $ 328,700 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.

a)A B C D

b)B C A D

c)C A B D

d)D C B A