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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Year Cashflow Interest rate 11% 0 (294,000) 1 106,448 2 97,628 3 88,808 4 127,518 Calculate the Project's NPV, IRR, MIRR, and payback. Do these indicators suggest that the project should be accepted? Explain
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Exercise 14-5 (Algo) Preference Ranking [LO14-5] Information on four investment proposals is given below: Investment required Present value of cash inflows Net present value Life of the project Investment Profitability Proposal Index A BUD В с D $ (280,000) 393,900 $ 113,900 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. Rank Preference. 5 years Investment Proposal C $ (50,000) 78,100 $28,100 B $ (140,000) 192,800 $ 52,800 7 years 6 years D $ (780,000) 1,038, 100 $ 258, 100 6 years.
TB 13-47 (Appendix 13A) The following data pertain to an investment (Appendix 13A) The following data pertain to an investment proposal: Present Investment Required $27,130 Annual Cost Savings $5,000 Projected life the investment 10 years Projected Salvage Value $-0- What would be the internal rate of return? (Ignore income taxes in this problem.) Multiple Choice 5.426%. 13.0%. 54.26%. О 542.6%.
Exercise 14-11 (Algo) Preference Ranking of Investment Projects [LO14-5] Oxford Company has limited funds available for investment and must ration the funds among four competing projects. Selected information on the four projects follows: Project InvestmentRequired PresentValue of Cash Inflows Life oftheProject(years) InternalRateof Return A $ 200,000 $ 234,323 7 22% B $ 118,000 $ 207,000 12 19% C $ 103,000 $ 165,035 7 20% D $ 162,000 $ 243,136 3 17% The net present values should be computed using a 10% discount rate. The company wants your assistance in determining which project to accept first, second, and so forth. Required: 1. Compute the profitability index for each project. 2. In order of preference, rank the four projects in terms of net present value, profitability index, and internal rate of return.
Exercise 12-14 (Algo) Comparison of Projects Using Net Present Value [LO12-2] Labeau Products, Limited, of Perth, Australia, has $15,000 to invest. The company is trying to decide between two alternative uses for the funds as follows: Invest in Project X Invest in Project Y Investment required $ 15,000 $ 15,000 Annual cash inflows $ 5,000 Single cash inflow at the end of 6 years $ 36,000 Life of the project 6 years 6 years The company’s discount rate is 16%. Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using tables. Required: 1. Compute the net present value of Project X. 2. Compute the net present value of Project Y. 3. Which project would you recommend the company accept?
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Exercise 12-11 (Algo) Preference Ranking of Investment Projects [LO12-5] Oxford Company has limited funds available for investment and must ration the funds among four competing projects. Selected information on the four projects follows: Project A B C D Investment Required $ 130,000 $ 136,000 $ 105,000 $ 169,000 Present value of Cash Inflows $ 249,323 $ 222,000 $ 180,035 $ 258, 136 Required 1 Required 2 Project Life of the Project (years) 7 The net present values should be computed using a 10% discount rate. The company wants your assistance in determining which project to accept first, second, and so forth. A B C 12 Required: 1. Compute the profitability index for each project. 2. In order of preference, rank the four projects in terms of net present value, profitability index, and internal rate of return. 7 3 Complete this question by entering your answers in the tabs below. Profitability Index Internal Rate of Return 20% 18% 19% 17% Compute the profitability index for each project.…