Chapter 11 Homework erto.mheducation.com/hm.tpx Investment Investment required (

Question

Chapter 11 Homework erto.mheducation.com/hm.tpx Investment Investment required (280,000) $(140,000) $ (50,000) $ (780,000) Present value of cash inflows Net present value Life of the project 393,900192,800 78,100 1,038,100 s 113,900 52800 28,100 258,100 6 years 5 years 7 years 6 years Required 1. Compute the project profitability index for each investment proposal. (Round your answers to 2 decimal places.) Investment Protitability Index 2 Rank the proposais in terms of preference O CABD DCBA BCAD ABCD

Explanation / Answer

Calculate profitability index :

2) Rank is C A B D

so answer is a) C A B D

Investment proposal Project profitability index A 393900/280000 = 1.41 B 192800/140000 = 1.38 C 78100/50000 = 1.56 D 1038100/780000 = 1.33

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