Question
Shaylee Corporation 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 Corporation 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?
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