Chapter 15, Problem 15.6.5P

Capital rationing decision involving four proposals

Kopecky Industries Inc. is considering allocating a limited amount of capital investment funds among four proposals. The amount of proposed investment, estimated income from operations, and net cash flow for each proposal are as follows:

The company’s capital rationing policy requires a maximum cash payback period of three years. In addition, a minimum average rate of return of 12% is required on allprojects. 1f the preceding standards are met, the net present value method and presentvalue indexes are used to rank the remaining proposals.

Instructions
Compute the present value index for each oldie proposals in part (4). Round to two decimal places.