Q32. Blue Spruce Inc. is comparing several alternative capital budgeting projects as shown below:

	Projects
	A	B	C
Initial investment	$102000	$142000	$182000
Present value of net cash flows	112000	132000	222000

Using the profitability index, the projects rank as

A, C, B.

C, B, A.

A, B, C.

C, A, B.

Q33. Tamarisk, Inc. is considering purchasing equipment costing $48000 with a 6-year useful life. The equipment will provide annual cost savings of $13600 and will be depreciated straight-line over its useful life with no salvage value. Tamarisk requires a 10% rate of return.

	Present Value of an Annuity of 1
Period	8%	9%	10%	11%	12%	15%
6	4.623	4.486	4.355	4.231	4.111	3.784

What is the approximate profitability index associated with this equipment?

1.20

1.23

1.35

0.73