Vinubhai Information on four investment proposals is given below:ABInvestment requiredNet present valueLife of the projectPresent value of cash inflows$ (900,000)1,263,600$ 363,600$ (170,000)233,400$ 63,400Investment ProposalC$ (90,000)136,500$ 46,5005 years7 yearsRequired: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.Investment ProfitabilityProposal IndexRankPreferenceABCD6 yearsD$ (1,430,000)1,908,300$478,3006 years

Profitability index = Present value of cash inflows / Initial investmentHigher the profitability…

Information on four investment proposals is given below: A Investment required Net present value. $ (900,000) Present value of cash inflows 1,263,600 $363,600 Life of the project 5 years 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. B Investment Proposal C $ (90,000) 136,500 $ (170,000) 233,400 $ 63,400 $ 46,500 7 years 6 years D $ (1,430,000) 1,908,300 $478,300 6 years

Information on four investment proposals is given below: A Investment required Net present value. $ (900,000) Present value of cash inflows 1,263,600 $363,600 Life of the project 5 years 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. B Investment Proposal C $ (90,000) 136,500 $ (170,000) 233,400 $ 63,400 $ 46,500 7 years 6 years D $ (1,430,000) 1,908,300 $478,300 6 years

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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