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Problem 1.Information on four investment proposals is given below Investment proposals ABCD Investment required85,000200,00090,000170,000 Present value of cashinflows119,000250,000135,000221,000 Life of the project5years7 years6 years6 years

Problem 1.Information on four investment proposals is given below

Investment proposals

ABCD

Investment required85,000200,00090,000170,000

Present value of cashinflows119,000250,000135,000221,000

Life of the project5years7 years6 years6 years

Required:

1.Compute the NPV

2.Compute the profitability index

3.Rank the projects according to NPV and then profitability index

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