Shaylee Corp has $2.00 million to invest in new projects. The company's managers have presented a number of possible options that the board must prioritize. Information about the projects follows: Project A Project B Project C $ 420,000 $ 235,000 $ 725,000 $ 950,000 420,000 1,205,000 1,565,000 Project D Initial investment Present value of future cash flowS 770,000
Shaylee Corp has $2.00 million to invest in new projects. The company's managers have presented a number of possible options that the board must prioritize. Information about the projects follows: Project A Project B Project C $ 420,000 $ 235,000 $ 725,000 $ 950,000 420,000 1,205,000 1,565,000 Project D Initial investment Present value of future cash flowS 770,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Shaylee Corp has $2.00 million to invest in new projects. The company's managers have presented a number of possible options that
the board must prioritize. Information about the projects follows:
Project A Project B Project C
$ 420,000 $ 235,000 $ 725,000 $ 950,000
770,000
Project D
Initial investment
Present value of future cash flows
420,000 1,205,000 1,565,00e
Required:
1. Is Shaylee able to invest in all of these projects simultaneously?
2-A. Calculate the profitability index for each project.
2-B. What is Shaylee's order of preference based on the profitability index?
Complete this question by entering your answers in the tabs below.
Req 1
Req 2A and 2B
2-A. Calculate the profitability index for each project. (Round your answers to 4 decimal places.)
2-B. What is Shaylee's order of preference based on the profitability index?
Profitability
Index
Rank
Project A
Project B
Project C
Project D
< Req 1
Rec 2A and 25
< Prev
7 of 9
Next >
nere to search
2
3.
5
6
Q
W](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F32b44169-c6ea-4b1f-a682-adbd8f829321%2F17e4a822-da12-414f-a043-89aca20921d9%2Fc6lizlg_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Shaylee Corp has $2.00 million to invest in new projects. The company's managers have presented a number of possible options that
the board must prioritize. Information about the projects follows:
Project A Project B Project C
$ 420,000 $ 235,000 $ 725,000 $ 950,000
770,000
Project D
Initial investment
Present value of future cash flows
420,000 1,205,000 1,565,00e
Required:
1. Is Shaylee able to invest in all of these projects simultaneously?
2-A. Calculate the profitability index for each project.
2-B. What is Shaylee's order of preference based on the profitability index?
Complete this question by entering your answers in the tabs below.
Req 1
Req 2A and 2B
2-A. Calculate the profitability index for each project. (Round your answers to 4 decimal places.)
2-B. What is Shaylee's order of preference based on the profitability index?
Profitability
Index
Rank
Project A
Project B
Project C
Project D
< Req 1
Rec 2A and 25
< Prev
7 of 9
Next >
nere to search
2
3.
5
6
Q
W
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