Preference RankingInformation on four investment proposals is given belowRequired:1. Compute the project profitability index for each investment proposal.2. Rank the proposals in terms of preference.: Investment ProposalAInvestment required.....Present value of cash infiows.Net present value ...Life of the project$(90,000)$(100,000)138.000$ 38,000$(70,000)105,000$(120,000)126,000$ 36.000160,000$ 40,000....$35,0005 years7 years6 years6 years

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Investment Proposal A Investment required..... Present value of cash infiows. Net present value ... Life of the project $(90,000) $(100,000) 138.000 $ 38,000 $(70,000) 105,000 $(120,000) 126,000 $ 36.000 160,000 $ 40,000 .... $35,000 5 years 7 years 6 years 6 years

Investment Proposal A Investment required..... Present value of cash infiows. Net present value ... Life of the project $(90,000) $(100,000) 138.000 $ 38,000 $(70,000) 105,000 $(120,000) 126,000 $ 36.000 160,000 $ 40,000 .... $35,000 5 years 7 years 6 years 6 years

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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Question

Preference Ranking

Information on four investment proposals is given below

Required:

1. Compute the project profitability index for each investment proposal.

2. Rank the proposals in terms of preference.:

Investment Proposal
A
Investment required.....
Present value of cash infiows.
Net present value ...
Life of the project
$(90,000)
$(100,000)
138.000
$ 38,000
$(70,000)
105,000
$(120,000)
126,000
$ 36.000
160,000
$ 40,000
....
$35,000
5 years
7 years
6 years
6 years

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