Question

Information on four investment proposals is given below: Investment Proposal 10 points eBook Investments 290.000) $ (140,000) $ (290,000) $ (140,000) $ (60,000) $ (1,300,000) required Present value of 421,200 196,500 94,300 1,734,600 cash inflows Net $ 131,200 $ 56,500 $ 34,300 $ 434,600 value Life of the 5 years 7 years 6 years 6 years project Hint Ask Print Required: 1. Compute the project profitability index for each investment proposal. (Round your answers to 2 decimal places.) 2. Rank the proposals in terms of preference. References Project. Rank Investmenprofitabil byeference Proposal Index

Answer 1

Investment proposal	Profitability index	Rank preference
A B C D	Profitability index (PI)= Present value of cash in flow / Inital investment 421200/290000= 1.4524 196500/140000=1.4035 94300/60000=1.5717 1734600/1300000=1.3343	2 3 1 4

Profitability index any thing more than 1 is a considerable project hence projected rated in that manner