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 C D $ (150,000) 211,500 $ 61,500 Rank Preference 5 years Investment Proposal B $ (200,000) 275,600 $ 75,600 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. 7 years $ (180,000) 274, 100 $ 94,100 6 years D $ (2,600,000) 3,470,500 $ 870,500 6 years
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 C D $ (150,000) 211,500 $ 61,500 Rank Preference 5 years Investment Proposal B $ (200,000) 275,600 $ 75,600 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. 7 years $ (180,000) 274, 100 $ 94,100 6 years D $ (2,600,000) 3,470,500 $ 870,500 6 years
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
please answer do not image format
![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
Investment Profitability
Proposal Index
A
B
C
D
A
$ (150,000)
211,500
$61,500
Rank
Preference
5 years
Investment Proposal
C
$ (180,000)
274, 100
$ 94,100
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.
$ (200,000)
275,600
$ 75,600
7 years
6 years
D
$ (2,600,000)
3,470,500
$ 870,500
6 years](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F68e23954-6a26-403a-9728-84b2d77c55d1%2Fa2d0c336-aa63-41f8-8303-d204a5c5f90e%2Fgpamlta_processed.jpeg&w=3840&q=75)
Transcribed Image Text: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
Investment Profitability
Proposal Index
A
B
C
D
A
$ (150,000)
211,500
$61,500
Rank
Preference
5 years
Investment Proposal
C
$ (180,000)
274, 100
$ 94,100
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.
$ (200,000)
275,600
$ 75,600
7 years
6 years
D
$ (2,600,000)
3,470,500
$ 870,500
6 years
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education