Question
Shaylee Corp has $2.10 million to invest in new projects. The company's managers have presented a number of possible options that the board must prioritize.
Shaylee Corp has $2.10 million to invest in new projects. The company's 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: A: $700,000 B: $380,000 C: $940,000 D: $1,095,000
Present value of future cash flows: A:915,000B: 490,000C: 1,550,000D: 1,410,000
What would the the profitability index for each project be?
What is Shaylee's order of preference based on the profitability index?
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Management Accounting Information for creating and managing value
Authors: Kim Langfield Smith, David Smith, Paul Andon, Ronald Hilton, Helen Thorne
8th edition
9781760420413 , 978-1760420406
