Exercise 12-5 (Algo) Preference Ranking [LO12-5]Information on four investment proposals is given below:Investment requiredPresent value of cash inflowsNet present valueLife of the projectInvestment ProfitabilityProposalIndexABCDA$ (60,000)88,600$ 28,600RankPreference5 yearsInvestment ProposalC$ (110,000)168,600$ 58,600B$ (190,000)260,600$ 70,600Required: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 years6 yearsD$ (2,660,03,551,0$ 891,0

Profitability Index: The profitability index, often known as the PI, is a statistic that may be…

Exercise 12-5 (Algo) Preference Ranking [LO12-5] Information on four investment proposals is given below: Investment required Present value of cash inflows Net present value Life of the project $ (60,000) 88,600 $ 28,600 5 years Investment Proposal C $ (110,000) 168,600 $ 58,600 B $ (190,000) 260,600 $ 70,600 7 years 6 years D $ (2,660,00 3,551,0 $ 891,0 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.

Exercise 12-5 (Algo) Preference Ranking [LO12-5] Information on four investment proposals is given below: Investment required Present value of cash inflows Net present value Life of the project $ (60,000) 88,600 $ 28,600 5 years Investment Proposal C $ (110,000) 168,600 $ 58,600 B $ (190,000) 260,600 $ 70,600 7 years 6 years D $ (2,660,00 3,551,0 $ 891,0 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.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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