Information on four investment proposals is given below: D $ (1,500,000) 2,001,700 $ 501,700 6 years A B Investment required Net present value Present value of cash inflows $ (300,000) 424,800 $ 124,800 $ (140,000) 191,700 $ 51,700 Investment Proposal C $ (100,000) 151,100 $ 51,100 Life of the project 5 years 7 years 6 years Required: 1. Compute the profitability index for each investment proposal. Note: Round your answers to 2 decimal places. 2. Rank the proposals in terms of preference. Investment Profitability Proposal Index Rank Preference Α ABCD
Information on four investment proposals is given below: D $ (1,500,000) 2,001,700 $ 501,700 6 years A B Investment required Net present value Present value of cash inflows $ (300,000) 424,800 $ 124,800 $ (140,000) 191,700 $ 51,700 Investment Proposal C $ (100,000) 151,100 $ 51,100 Life of the project 5 years 7 years 6 years Required: 1. Compute the profitability index for each investment proposal. Note: Round your answers to 2 decimal places. 2. Rank the proposals in terms of preference. Investment Profitability Proposal Index Rank Preference Α ABCD
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter12: Capital Investment Analysis
Section: Chapter Questions
Problem 4BE: Internal rate of return A project is estimated to cost 463,565 and provide annual net cash flows of...
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![Information on four investment proposals is given below:
6 years
A
B
Investment required
Present value of cash inflows
Net present value
$ (300,000)
424,800
$ 124,800
$ (140,000)
191,700
$ 51,700
Investment Proposal
C
$ (100,000)
151,100
$ 51,100
Life of the project
5 years
7 years
Required:
1. Compute the profitability index for each investment proposal.
Note: Round your answers to 2 decimal places.
2. Rank the proposals in terms of preference.
Investment Profitability
Proposal
Index
Rank
Preference
ABCD
D
$ (1,500,000)
2,001,700
$ 501,700
6 years](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F65c6ec18-50d6-4f24-9a15-f6bccd727f43%2Ff4c079d8-3e5c-4db6-a6ac-04e722b9a16d%2F5v1493_processed.png&w=3840&q=75)
Transcribed Image Text:Information on four investment proposals is given below:
6 years
A
B
Investment required
Present value of cash inflows
Net present value
$ (300,000)
424,800
$ 124,800
$ (140,000)
191,700
$ 51,700
Investment Proposal
C
$ (100,000)
151,100
$ 51,100
Life of the project
5 years
7 years
Required:
1. Compute the profitability index for each investment proposal.
Note: Round your answers to 2 decimal places.
2. Rank the proposals in terms of preference.
Investment Profitability
Proposal
Index
Rank
Preference
ABCD
D
$ (1,500,000)
2,001,700
$ 501,700
6 years
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