Shaylee Corp has $2.25 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 C 600,000 $ 280,000 $ 840,000 $ 995,000 1,250,000 Project B Project D Project A Initial investment 440,000 Present value of future cash flows 815,000 1,610,000 Required: 1. Is Shaylee able to invest in all of these projects simultaneously? No Yes 2-a. Calculate the profitability index for each project. (Round your answers to 4 decimal places.) Profitability Index Project A Project B Project C Project D 2-b. What is Shaylee's order of preference based on the profitability index? Rank Project A Project B Project C Project D
Shaylee Corp has $2.25 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 C 600,000 $ 280,000 $ 840,000 $ 995,000 1,250,000 Project B Project D Project A Initial investment 440,000 Present value of future cash flows 815,000 1,610,000 Required: 1. Is Shaylee able to invest in all of these projects simultaneously? No Yes 2-a. Calculate the profitability index for each project. (Round your answers to 4 decimal places.) Profitability Index Project A Project B Project C Project D 2-b. What is Shaylee's order of preference based on the profitability index? Rank Project A Project B Project C Project D
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Shaylee Corp has $2.25 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 C
600,000 $ 280,000 $ 840,000 $ 995,000
1,250,000
Project B
Project D
Project A
Initial investment
440,000
Present value of future cash flows
815,000
1,610,000
Required:
1. Is Shaylee able to invest in all of these projects simultaneously?
No
Yes
2-a. Calculate the profitability index for each project. (Round your answers to 4 decimal places.)
Profitability Index
Project A
Project B
Project C
Project D
2-b. What is Shaylee's order of preference based on the profitability index?
Rank
Project A
Project B
Project C
Project D
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