Information on four investment proposals is given below: Investment Proposal B C A D Investment required $(136,000) $(146,000) $(116,000) $(189,000) 209,440 216,080 153, 120 275,940 Present value of cash inflows Net present value $ 73,440 $ 70,080 $ 37,120 $ 86,940 5 years 7 years 6 years 6 years Life of the project 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.
Information on four investment proposals is given below: Investment Proposal B C A D Investment required $(136,000) $(146,000) $(116,000) $(189,000) 209,440 216,080 153, 120 275,940 Present value of cash inflows Net present value $ 73,440 $ 70,080 $ 37,120 $ 86,940 5 years 7 years 6 years 6 years Life of the project 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.
Fundamentals of Financial Management (MindTap Course List)
15th Edition
ISBN:9781337395250
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Eugene F. Brigham, Joel F. Houston
Chapter11: The Basics Of Capital Budgeting
Section: Chapter Questions
Problem 10P: CAPITAL BUDGETING CRITERIA: MUTUALLY EXCLUSIVE PROJECTS A firm with a WACC of 10% is considering the...
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![Exercise 12-5 Preference Ranking [LO12-5]
Information on four investment proposals is given below:
Investment Proposal
B
C
D
Investment required
Present value of cash inflows
A
$(136,000) $(146,000) $(116,000) $(189,000)
209,440 216,080 153, 120 275,940
Net present value
$ 73,440 $ 70,080 $ 37,120 $ 86,940
Life of the project
5 years 7 years 6 years 6 years
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.
Investment
Proposal
Project
Profitability
Rank
Preference
Index
ABCD
0.54 First
0.48
Second
Fourth
Third](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe46568af-c368-488b-9143-b6defc8e04fb%2F3cc6ced2-3ef7-4eb0-b372-63f42c448cd2%2F3omkn4t_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Exercise 12-5 Preference Ranking [LO12-5]
Information on four investment proposals is given below:
Investment Proposal
B
C
D
Investment required
Present value of cash inflows
A
$(136,000) $(146,000) $(116,000) $(189,000)
209,440 216,080 153, 120 275,940
Net present value
$ 73,440 $ 70,080 $ 37,120 $ 86,940
Life of the project
5 years 7 years 6 years 6 years
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.
Investment
Proposal
Project
Profitability
Rank
Preference
Index
ABCD
0.54 First
0.48
Second
Fourth
Third
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