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Information on four investment proposals is given below: Investment Proposal D. Investment required Present value of cash inflows $(150,000) $(80,000) $(160,000) $ (910,000) 211,800 110,400 241,600 1,214,500 Net present value Life of the project $ 61,800 $ 30,400 $ 81,600 $ 304,500 5 years 7 years 6 years 6 years 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.

Information on four investment proposals is given below: Investment Proposal D. Investment required Present value of cash inflows $(150,000) $(80,000) $(160,000) $ (910,000) 211,800 110,400 241,600 1,214,500 Net present value Life of the project $ 61,800 $ 30,400 $ 81,600 $ 304,500 5 years 7 years 6 years 6 years 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
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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Information on four investment proposals is given below: Investment Proposal Investment required $(150,000) $(80,000) $(160,000) $ (910,000) 211,800 $ 61,800 $ 30,400 $ 81,600 $ 304,500 Present value of cash inflows 110,400 241,600 1,214,500 Net present value Life of the project 5 years 7 years 6 years б уears 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. Investment Profitabiity Proposal Rank Index Preference A < Prev 5 of 8 Next > search
Transcribed Image Text:Information on four investment proposals is given below: Investment Proposal Investment required $(150,000) $(80,000) $(160,000) $ (910,000) 211,800 $ 61,800 $ 30,400 $ 81,600 $ 304,500 Present value of cash inflows 110,400 241,600 1,214,500 Net present value Life of the project 5 years 7 years 6 years б уears 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. Investment Profitabiity Proposal Rank Index Preference A < Prev 5 of 8 Next > search
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