Information on four investment proposals is given below:
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Investment Proposal |
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| A | B | C | D | |||||
| Investment required | $ | (85,000) | $ | (200,000) | $ | (90,000) | $ | (170,000) |
| Present value of cash inflows | 119,000 | 250,000 | 135,000 | 221,000 | ||||
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| Net present value | $ | 34,000 | $ | 50,000 | $ | 45,000 | $ | 51,000 |
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| Life of the project | 5 years | 7 years | 6 years | 6 years | ||||
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| Required: | |
| 1. |
Compute the project profitability index for each investment proposal. (Round your answers to 2 decimal places.) |
| Proposal | Project Profitability Index |
| A | |
| B | |
| C | |
| D | |
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| 2. |
Rank the proposals in terms of preference. |
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