Shaylee Corporation 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: Initial investment Present value of future cash flows Project A $ 435,000 785,000 Project B $ 250,000 435,000 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? Project C $ 740,000 1,220,000 Project D $ 965,000 1,580,000

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Shaylee Corporation 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:
Initial investment
Present value of future cash flows
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
Project A
$ 435,000
785,000
Req 2A and 2B
Is Shaylee able to invest in all of these projects simultaneously?
Is Shaylee able to invest in all of these projects simultaneously?
< Req 1
Project B
$ 250,000
435,000
Req 2A and 2B >
Project C
$ 740,000
1,220,000
Project D
$ 965,000
1,580,000
Transcribed Image Text:Shaylee Corporation 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: Initial investment Present value of future cash flows 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 Project A $ 435,000 785,000 Req 2A and 2B Is Shaylee able to invest in all of these projects simultaneously? Is Shaylee able to invest in all of these projects simultaneously? < Req 1 Project B $ 250,000 435,000 Req 2A and 2B > Project C $ 740,000 1,220,000 Project D $ 965,000 1,580,000
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