Information on four investment proposals is given below:6 yearsABInvestment requiredPresent value of cash inflowsNet present value$ (300,000)424,800$ 124,800$ (140,000)191,700$ 51,700Investment ProposalC$ (100,000)151,100$ 51,100Life of the project5 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 ProfitabilityProposalIndexRankPreferenceABCDD$ (1,500,000)2,001,700$ 501,7006 years

Profitability index is calculated by dividing the Present value of cash inflow by the Initial…

Information on four investment proposals is given below: D $ (1,500,000) 2,001,700 $ 501,700 6 years A B Investment required Net present value Present value of cash inflows $ (300,000) 424,800 $ 124,800 $ (140,000) 191,700 $ 51,700 Investment Proposal C $ (100,000) 151,100 $ 51,100 Life of the project 5 years 7 years 6 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. Investment Profitability Proposal Index Rank Preference Α ABCD

Information on four investment proposals is given below: D $ (1,500,000) 2,001,700 $ 501,700 6 years A B Investment required Net present value Present value of cash inflows $ (300,000) 424,800 $ 124,800 $ (140,000) 191,700 $ 51,700 Investment Proposal C $ (100,000) 151,100 $ 51,100 Life of the project 5 years 7 years 6 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. Investment Profitability Proposal Index Rank Preference Α ABCD

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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