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Information on four investment proposals is given below:
| | | Investment Proposal | |
| | A | B | C | D |
| Investment required | $ | (720,000 | ) | $ | (160,000 | ) | $ | (130,000 | ) | $ | (1,560,000 | ) |
| Present value of cash inflows | | 1,013,000 | | | 221,800 | | | 198,900 | | | 2,081,400 | |
| Net present value | $ | 293,000 | | $ | 61,800 | | $ | 68,900 | | $ | 521,400 | |
| Life of the project | | 5 years | | | 7 years | | | 6 years | | | 6 years | |
| |
Required:
1. Compute the project profitability index for each investment proposal. (Round your answers to 2 decimal places.)
2. Rank the proposals in terms of preference.
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