Information on four Investment proposals is glven below: Investment Proposal A B Investment required Present value of cash inflows $(390, 000) $(30,e00) $(48,000) S(600,000) 41,000 800, 000 64,100 $ 161,000 $ 11,000 $ 24,100 $ 200,000 7 years 551,000 Net present value Life of the project 5 years 6 years 6 years Requlred: 1. Compute the profitability index for each Investment proposal. (Round your answers to 2 decimal places.) 2. Rank the proposals In terms of preference. Investment Profitability Proposal Rank Preference Index A B D

Information on four Investment proposals is glven below: Investment Proposal A B Investment required Present value of cash inflows $(390, 000) $(30,e00) $(48,000) S(600,000) 41,000 800, 000 64,100 $ 161,000 $ 11,000 $ 24,100 $ 200,000 7 years 551,000 Net present value Life of the project 5 years 6 years 6 years Requlred: 1. Compute the profitability index for each Investment proposal. (Round your answers to 2 decimal places.) 2. Rank the proposals In terms of preference. Investment Profitability Proposal Rank Preference Index A B D

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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nformation on four investment proposals is given below: Investment Proposal A B C D Investment required $ (94,000 ) $ (104,000 ) $ (74,000 ) $ (126,000 ) Present value of cash inflows 141,000 153,920 100,640 194,040 Net present value $ 47,000 $ 49,920 $ 26,640 $ 68,040 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 Index Rank Preference A ____________ Second B ____________ Third C ____________ Fourth D ____________ First
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