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Preference Ranking Information on four investment proposals is given below: Investment Proposal ABCD Investment required$(85,000)$(200,000)$(90,000)$(170,000) Present value of cash flows 119,000250,000 135,000221,000 Net present value
Preference Ranking
Information on four investment proposals is given below:
Investment Proposal
ABCD
Investment required$(85,000)$(200,000)$(90,000)$(170,000)
Present value of cash flows 119,000250,000 135,000221,000
Net present value $34,000$50,000 $45,000$51,000
Life of the project5 years7 years6 years6 years
Required:
1.Compute the project profitability index for each investment proposal.
2.Rank the proposals in terms of preference.
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