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nformation on four investment proposals is given below: investment proposal a b c d investment required $ (90,000) $ (100,000) $ (70,000) $ (120,000) present value of cash inflows 126,000 138,000 105,000 160,000 net present value $ 36,000 $ 38,000 $ 35,000 $ 40,000 life of the project 5 years 7 years 6 years 6 years required: 1. compute the profitability index for each investment proposal. (round your answers to 2 decimal places.) 2. rank the proposals in terms of preference.
nformation on four investment proposals is given below: investment proposal a b c d investment required $ (90,000) $ (100,000) $ (70,000) $ (120,000) present value of cash inflows 126,000 138,000 105,000 160,000 net present value $ 36,000 $ 38,000 $ 35,000 $ 40,000 life of the project 5 years 7 years 6 years 6 years required: 1. compute the profitability index for each investment proposal. (round your answers to 2 decimal places.) 2. rank the proposals in terms of preference.
Based on the profitability index, theinvestmentproposals should be ranked in the following order of preference: Proposal C, Proposal A, Proposal B, and Proposal D.Let's calculate the profitability index for each investmentproposaland rank them accordingly.1.ProfitabilityIndex (PI) Calculation:PI = (Present Value of CashInflows) / (Initial Investment Required)Proposal A:PI = 126,000 / 90,000 = 1.40Proposal B:PI = 138,000 / 100,000 = 1.38Proposal C:PI = 105,000 / 70,000 = 1.50Proposal D:PI = 160,000 / 120,000 = 1.332. Ranking the proposals in terms of preference:To rank the proposals, we will use the calculated profitabilityindex. A higher PI indicates a better investmentopportunity.1st: Proposal C (PI = 1.50)2nd: Proposal A (PI = 1.40)3rd: Proposal B (PI = 1.38)4th: Proposal D (PI = 1.33)Learn More aboutinvestmenthere :-brainly.com/question/15353704#SPJ11...