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The capital budgeting department of a company has suggested


Question: The capital budgeting department of a company has suggested 3 investment proposals. The after tax cash flows for each are tabulated below. If the company's cost of capital is 12%, rank them on the basis of profitability index.

AFTER TAX CASH FLOWS:

YEAR         PROJECT A         PROJECT B         PROJECT C

0               - 20000           - 60000           - 36000

1                   5600             12000              13000

2                   6000             20000              13000

3                   8000             24000              13000

4                   8000             32000              13000

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Finance Basics: The capital budgeting department of a company has suggested
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