Information on four investment proposals at Tampa Corp. is given below:
|
A |
B |
C |
D |
|
|
Investment required |
$85,000 |
$200,000 |
$90,000 |
$170,000 |
|
Present value of cash flows |
119,000 |
250,000 |
135,000 |
221,000 |
|
Net present value |
34,000 |
50,000 |
45,000 |
51,000 |
|
Life of the project |
5 year |
7 year |
6 year |
6 year |
Required: Compute the project profitability index for each proposal and rank the proposals in terms of preference.