Information on four investment proposals at Tampa Corp. is given below:
|
A
|
B
|
C
|
D
|
|
Investment required
|
$85,000
|
$200,000
|
$90,000
|
$170,000
|
|
Present value of cash flows
|
119,000
|
250,000
|
135,000
|
221,000
|
|
Net present value
|
34,000
|
50,000
|
45,000
|
51,000
|
|
Life of the project
|
5 year
|
7 year
|
6 year
|
6 year
|
Required: Compute the project profitability index for each proposal and rank the proposals in terms of preference.