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 $ (60,000) 88,600 $ 28,600 Rank Preference 5 years Investment Proposal C $ (110,000) 168,600 $ 58,600 B $ (190,000) 260,600 $ 70,600 7 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. 6 years D $ (2,660,06 3,551,0 $ 891,0
Dividend Policy
A dividend is a part of the profit paid to the shareholder in an organization. The management of the organization has the right to decide the policy for giving a dividend from the earnings to the shareholder. However, an organization is not in the obligation to declare a dividend for the investor. Dividend policy differs from organization to organization. As the management has the only authority to decide dividend rate, dividend amount, and time of dividend payout by considering all other elements that create an impact on the payment of a dividend.
Stocks And Dividends
Stock or equities are generally sold and bought in the Stock Exchange or which is popularly known as the stock market. Stocks are issued in the Stock Exchange for the sole purpose of raising funds for the Corporation or the company itself. Now since an individual has purchased a portion of the Corporation or company, he or she may claim to be a part of the earnings or profit of the company.
Alpesh
![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
Proposal
A
B
C
D
Profitability
Index
A
$ (60,000)
88,600
$ 28,600
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.
Rank
Preference
5 years
Investment Proposal
C
$ (110,000)
168,600
$ 58,600
B
$ (190,000)
260,600
$ 70,600
7 years
6 years
D
$ (2,660,0
3,551,0
$ 891,0](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ffb467e0c-f883-4802-8161-24e261221ab2%2F36f6590b-9224-4499-8bf5-50aac9cd8347%2For2x5ak_processed.jpeg&w=3840&q=75)
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