(Answered) Problem - information on four investment proposals is given

Accounting

Problem - Information on four investment proposals is given below:

	Investment Proposal
	A	B	C	D
Investment required	$(330,000)	$(40,000)	$(190,000)	$(2,380,000)
Present value of cash inflows	480,000	56,500	286,700	3,178,500
Net present value	$150,000	$16,500	$96,700	798,500
Life of the project	5 years	7 years	6 years	6 years

Required:

1. Compute the project profitability index for each investment proposal.

2. Rank the proposals in terms of preference.

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