(90,000) 126,000 $36,000 5 years $ (100,000) 138,000 $ 38,000 7 years $ (70,000) 105,000 $ 35,000 6 years stment proposal. (Round your answers to 2 decimal places.)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
icon
Concept explainers
Question

ss

Information on four investment proposals is given below:
Investment required
Present value of cash inflows
Net present value.
Life of the project
Investment Profitability
Index
Proposal
A
500
D
A
$ (90,000)
126,000
$36,000
Rank
Preference
5 years
Investment Proposal
$ (70,000)
105,000
$ 35,000
B
$ (100,000)
138,000
$ 38,000
Required:
1. Compute the profitability index for each Investment proposal. (Round your answers to 2 decimal places.)
2. Rank the proposals in terms of preference.
7 years
6 years
$ (120,000)
160,000
$ 40,000
6 years
Transcribed Image Text:Information on four investment proposals is given below: Investment required Present value of cash inflows Net present value. Life of the project Investment Profitability Index Proposal A 500 D A $ (90,000) 126,000 $36,000 Rank Preference 5 years Investment Proposal $ (70,000) 105,000 $ 35,000 B $ (100,000) 138,000 $ 38,000 Required: 1. Compute the profitability index for each Investment proposal. (Round your answers to 2 decimal places.) 2. Rank the proposals in terms of preference. 7 years 6 years $ (120,000) 160,000 $ 40,000 6 years
Expert Solution
steps

Step by step

Solved in 3 steps

Blurred answer
Knowledge Booster
Completing the Accounting Cycle
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education