LiverpoolLiverpool

Manufacturing is considering three capital investment proposals. At this time, the company has funds available to pursue only one of the three investments.

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Requirement

Which investment should

LiverpoolLiverpool

Manufacturing pursue at this time? Why?

Since each investment presents a positive NPV,

LiverpoolLiverpool

Manufacturing should use the

profitability index

to compare the profitability of each investment.

Use the method selected above to compare the profitability of each investment beginning with Equipment A. (Enter all amounts as positive numbers. Round your final answer to two decimal places.)

Equipment A

Divide by:

PROPSALS :

	Equipment A	Equipment B	Equipment C
Present value of net cash
inflows. . . . . . . . .	$1,690,000	$1,980,000	$2,190,000
Investment. . . . . . . . . . .	(1,625,000)	(1,800,000)	(1,825,000)
NPV. . . . . . . . . . . . . . . .	$65,000	$180,000	$365,000