Information on four investment proposals is provided below:

	Investment Proposal
	A			B			C			D
Investment required	$	(45,000	)		$	(50,000	)		$	(35,000	)		$	(60,000	)
Present value of cash inflows		65,000				45,000				53,000				80,000
Net present value	$	20,000			$	(5,000	)		$	18,000			$	20,000
Life of the project		5 years				7 years				6 years				8 years

Required:

1. Compute the profitability index for each investment proposal. (Round your answers to 2 decimal places.)

2. Rank the proposals in terms of preference.

multiple choice

D C B A

B C A D

C A D B

A B C D