Information on four potential projects is given below: Projects A B C D Investment required $(350,000) $(390,000) $(450,000) $(480,000) Present value of cash inflows 535,000 590,000 670,000 730,000 Net present value $185,000 200,000 $220,000 $250,000 Ignore income taxes Required: Compute the project profitability index for each project. Rank the projects in terms of preference.
Information on four potential projects is given below: Projects A B C D Investment required $(350,000) $(390,000) $(450,000) $(480,000) Present value of cash inflows 535,000 590,000 670,000 730,000 Net present value $185,000 200,000 $220,000 $250,000 Ignore income taxes Required: Compute the project profitability index for each project. Rank the projects in terms of preference.
Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter26: Capital Investment Analysis
Section: Chapter Questions
Problem 2CMA: Staten Corporation is considering two mutually exclusive projects. Both require an initial outlay of...
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Information on four potential projects is given below:
|
Projects |
|||
|
A |
B |
C |
D |
Investment required |
$(350,000) |
$(390,000) |
$(450,000) |
$(480,000) |
Present value of |
535,000 |
590,000 |
670,000 |
730,000 |
|
$185,000 |
200,000 |
$220,000 |
$250,000 |
Ignore income taxes
Required:
- Compute the project profitability index for each project.
- Rank the projects in terms of preference.
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