Question

Components of Var(R) Var(e) Var(R) Var(R) 2Cov(Re) AVar 13.81 7.60 10.97 12.73 12.55 9.91 4.55 4.57 (33.09%) 3.47 (45.66%) 2.86 (26.07)% 1.98 (15.55%) 2.07 (16.49%) 4.17 (42.08%) 4.55 (100%) 11.20 (81.10%) 4.90 (64.47%) 9.19 (83.77%) 9.93 (78.00%) 10.82 (86.22%) 7.57 (76.39%) 0.00 (n.a.) -2.08 (-15.06%) -0.79 (-10.39%) -1.22 (-11.12%) 0.69 (5.42%) -0.57(-4.54%) -2.02 (-20.38%) 0.00 (n.a.) 0.12 (0.87%) 0.02 (0.26%) 0.14(1.28%) 0.13(1.03%) 0.23 (1.83%) 0.19 (1.92%) 0.00 (n.a.) Bonds Australia Canada Germany Japan Switzerland U.K. U.S. Stocks Australia Canada Germany Japan Switzerland U.K. U.S. 37.75 31.35 44.44 39.85 24.54 25.77 20.27 16.36 (43.34%) 18.25 (58.21%) 37.58 (84.56%) 34.45 (86.46%) 20.75 (84.58%) 18.88 (73.28%) 20.27 (100%) 11.20 (29.67%) 4.90 (15.61%) 9.19 (20.67%) 9.93 (24.91%) 10.82 (44.08%) 7.57 (29.36%) 0.00 (n.a.) 10.39 (27.52%) 8.51 (27.14%) -2.54 (-5.72%) -5.07(-12.72%) -7.27(-29.65%) -0.86 (-3.34%) 0.00 (n.a.) -0.20 (-0.53%) -0.31 (-0.96%) 0.21 (0.49%) 0.54 (1.35%) 0.24 (0.99%) 0.18 (0.70%) 0.00 (n.a.)

Answer 1

Profitabilty Index	=	PV of Cash inflows
Initial Investment
Description		Project X	Project Y	Project Z
PV of Cash inflows	=	$                28,700.00	$                66,290.00	$                80,450.00
Investment required	=	$                25,750.00	$                57,800.00	$                74,300.00
Profitabilty Index
PV of Cash inflows	=	$                28,700.00	$                66,290.00	$                80,450.00
Initial Investment	$                25,750.00	$                57,800.00	$                74,300.00
	=	1.11	1.15	1.08
RANK		2	1	3
Rank - Project Y, Project X, Project Z
Answer is Option A