Question
Shaylee Corp has $2.00 million to invest in new projects. The companys managers have presented a number of possible options that the board must prioritize.
Shaylee Corp has $2.00 million to invest in new projects. The companys managers have presented a number of possible options that the board must prioritize. Information about the projects follows:
Project A | Project B | Project C | Project D | |||||
Initial investment | $ | 426,000 | $ | 241,000 | $ | 731,000 | $ | 956,000 |
Present value of future cash flows | 776,000 | 426,000 | 1,211,000 | 1,571,000 | ||||
Required:
1. Is Shaylee able to invest in all of these projects simultaneously?
2-A. Calculate the profitability index for each project.
2-B. What is Shaylees order of preference based on the profitability index?
2-A. Calculate the profitability index for each project. (Round your answers to 4 decimal places.)
2-B. What is Shaylees order of preference based on the profitability index?
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