Information on four investment proposals is given below: Investment required Present value of cash inflows Net present value Life of the project Investment Proposal 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. A B C D Profitability Index $ (240,000) 337,300 $ 97,300 Rank Preference 5 years Investment Proposal C $ (180,000) 271,800 $ 91,800 B $ (42,000) 53,500 $15,000 7 years 6 years D $ (1,900,000) 2,536,700 $636,700 6 years
Information on four investment proposals is given below: Investment required Present value of cash inflows Net present value Life of the project Investment Proposal 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. A B C D Profitability Index $ (240,000) 337,300 $ 97,300 Rank Preference 5 years Investment Proposal C $ (180,000) 271,800 $ 91,800 B $ (42,000) 53,500 $15,000 7 years 6 years D $ (1,900,000) 2,536,700 $636,700 6 years
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![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
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.
ABCO
А
с
D
$ (240,000)
337,300
$ 97,300
Rank
Preference
5 years
Investment Proposal
C
$ (180,000)
271,800
$ 91,800
B
$ (42,000)
53,500
$ 15,000
7 years
6 years
D
$ (1,900,000)
2,536,700
$ 636,700
6 years](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd405c047-8592-45aa-aa9f-870148c519ec%2F1aba8e71-b1c8-4c2e-a86f-5002072cfacf%2Fkwcnnc_processed.jpeg&w=3840&q=75)
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
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.
ABCO
А
с
D
$ (240,000)
337,300
$ 97,300
Rank
Preference
5 years
Investment Proposal
C
$ (180,000)
271,800
$ 91,800
B
$ (42,000)
53,500
$ 15,000
7 years
6 years
D
$ (1,900,000)
2,536,700
$ 636,700
6 years
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