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Information on four investment proposals is given below. A Investment required Net present value Present value of cash inflows $ (190,000) 267,400 $ 77,400 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. Investment Profitability Proposal Index Rank Preference A B C D B Investment Proposal $ (180,000) 249,400 $ 69,400 7 years C $ (170,000) 259,300 $ 89,300 6 years D $ (900,000) 1,197,500 $ 297,500 6 years

Information on four investment proposals is given below. A Investment required Net present value Present value of cash inflows $ (190,000) 267,400 $ 77,400 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. Investment Profitability Proposal Index Rank Preference A B C D B Investment Proposal $ (180,000) 249,400 $ 69,400 7 years C $ (170,000) 259,300 $ 89,300 6 years D $ (900,000) 1,197,500 $ 297,500 6 years

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. A Investment required Net present value Present value of cash inflows $ (190,000) 267,400 $ 77,400 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. Investment Profitability Proposal Index Rank Preference A B C D B Investment Proposal $ (180,000) 249,400 $ 69,400 7 years C $ (170,000) 259,300 $ 89,300 6 years D $ (900,000) 1,197,500 $ 297,500 6 years
Transcribed Image Text:Information on four investment proposals is given below. A Investment required Net present value Present value of cash inflows $ (190,000) 267,400 $ 77,400 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. Investment Profitability Proposal Index Rank Preference A B C D B Investment Proposal $ (180,000) 249,400 $ 69,400 7 years C $ (170,000) 259,300 $ 89,300 6 years D $ (900,000) 1,197,500 $ 297,500 6 years
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