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 A B с D A $ (60,000) 88,000 $ 28,000 5 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. Rank Preference Investment Proposal с $ (40,000) 64,200 $ 24, 200 B $ (70,000) 97,300 $ 27,300 7 years 6 years D $ (990,000) 1,318,700 $ 328,700 6

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 A B с D A $ (60,000) 88,000 $ 28,000 5 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. Rank Preference Investment Proposal с $ (40,000) 64,200 $ 24, 200 B $ (70,000) 97,300 $ 27,300 7 years 6 years D $ (990,000) 1,318,700 $ 328,700 6

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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Compute the payback statistic for Project A if the appropriate cost of capital is 8 percent and the maximum allowable payback period is four years. (Round your answer to 2 decimal places.) Project A Time: 0 1 2 3 4 5 Cash flow: −$1,300 $470 $570 $580 $360 $160 Payback: In years? Should the project be accepted or rejected?multiple choice accepted rejected
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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 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 A B C D S (150,000) 211,800 $61,500 Rank Preference 5 years Investment Proposal $(80,000) 110,400 $ 30,400 7 years $ (160,000) 241,600 $ 81,600 6 years D $ (910,000) 1.214,500 $ 304,500 6 years
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