Exercise 14-5 (Algo) Preference Ranking [LO14-5]Information on four investment proposals is given below:Investment requiredPresent value of cash inflowsNet present valueLife of the projectRequired:Investment ProfitabilityProposalIndexABCDA$ (60,000)88,600$ 28,6001. Compute the profitability index for each investment proposal.Note: Round your answers to 2 decimal places.2. Rank the proposals in terms of preference.RankPreference5 yearsInvestment ProposalC$ (110,000)168,600$ 58,600B$ (190,000)260,600$ 70,6007 years6 yearsD$(2,660,000)3,551,000$ 891,0006 years

Profitability Index: The profitability index, sometimes known as the PI, is a metric that may be…

Exercise 14-5 (Algo) Preference Ranking [LO14-5] Information on four investment proposals is given below: Investment required Present value of cash inflows Investment Profitability Proposal Index Net present value Life of the project Required: 1. Compute the profitability index for each investment proposal. Note: Round your answers to 2 decimal places. 2. Rank the proposals in terms of preference. A B C D A $ (60,000) 88,600 $ 28,600 Rank Preference 5 years Investment Proposal C $ (110,000) 168,600 $ 58,600 B $ (190,000) 260,600 $ 70,600 7 years 6 years D $ (2,660,000) 3,551,000 $ 891,000 6 years

Exercise 14-5 (Algo) Preference Ranking [LO14-5] Information on four investment proposals is given below: Investment required Present value of cash inflows Investment Profitability Proposal Index Net present value Life of the project Required: 1. Compute the profitability index for each investment proposal. Note: Round your answers to 2 decimal places. 2. Rank the proposals in terms of preference. A B C D A $ (60,000) 88,600 $ 28,600 Rank Preference 5 years Investment Proposal C $ (110,000) 168,600 $ 58,600 B $ (190,000) 260,600 $ 70,600 7 years 6 years D $ (2,660,000) 3,551,000 $ 891,000 6 years

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter12: Capital Investment Analysis

Section: Chapter Questions

Problem 3PB: Net present value method, present value index, and analysis for a service company First United Bank...

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