The management of Orion Industries is considering four investment projects-A, B, C, and D. The initial investment required and the present value of expected cash inflows for each project are as follows: Project Initial Investment Present Value of Cash Inflows A $120,000 $139,200 B $75,000 $90,000 C $200,000 $248,000 D $150,000 $171,000 Rank the projects according to the profitability index, from most profitable to least profitable. a. C, B, A, D b. B, C, A, D c. D, A, B, C d. C, A, B, D

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 7PA: There are two projects under consideration by the Rainbow factory. Each of the projects will require...
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The management of Orion Industries is considering four investment projects-A, B, C, and D.
The initial investment required and the present value of expected cash inflows for each project
are as follows:
Project Initial Investment Present Value of Cash Inflows
A
$120,000
$139,200
B
$75,000
$90,000
C
$200,000
$248,000
D
$150,000
$171,000
Rank the projects according to the profitability index, from most profitable to least profitable.
a. C, B, A, D
b. B, C, A, D
c. D, A, B, C
d. C, A, B, D
Transcribed Image Text:The management of Orion Industries is considering four investment projects-A, B, C, and D. The initial investment required and the present value of expected cash inflows for each project are as follows: Project Initial Investment Present Value of Cash Inflows A $120,000 $139,200 B $75,000 $90,000 C $200,000 $248,000 D $150,000 $171,000 Rank the projects according to the profitability index, from most profitable to least profitable. a. C, B, A, D b. B, C, A, D c. D, A, B, C d. C, A, B, D
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