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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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
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