Information on four investment proposals is given below: Investment Proposal A B
ID: 2472396 • Letter: I
Question
Information on four investment proposals is given below:
Investment Proposal A B C D
Investment required $ (60,000) $ (70,000) $ (40,000) $ (990,000)
Present value of cash inflows 88,000 97,300 64,200 1,318,700
Net present value $ 28,000 $ 27,300 $ 24,200 $ 328,700 Life of the project 5 years 7 years 6 years 6 years
1. Compute the project profitability index for each investment proposal. (Round your answers to 2 decimal places.)
These are the answers I got but they are wrong please help a)1.47 b)1.39 c)1.61 d)1.33
Explanation / Answer
Profitability Index = Present value of cash inflows / Present value of cash out flows
Investment Calculation Profitability Index
A = 88000 / 60000 1.47
B = 97300 / 70000 1.39
C = 40000 / 64200 1.61
D = 1318700 / 990000 1.33.