Homework Answers
Solution 1:
| Project Profitability Index | |||||
| Particulars | Project 1 | Project 2 | Project 3 | Project 4 | Project 5 |
| NPV | $87,270.00 | $73,400.00 | $66,140.00 | $72,970.00 | -$20,240.00 |
| Investment required | $480,000.00 | $360,000.00 | $270,000.00 | $450,000.00 | $400,000.00 |
| Project Profitability Index (NPV / Investment Required) | 0.18 | 0.20 | 0.24 | 0.16 | -0.05 |
Solution 2:
| Ranking | Net Present Value | Project Profitability Index |
| First Preference | 1 | 3 |
| Second Preference | 2 | 2 |
| Third Preference | 4 | 1 |
| Fourth Preference | 3 | 4 |
| Fifth Preference | 5 | 5 |
Solution 3:
We will prefer PI ranking because it represent how much NPV is earned for every $1 of investment.
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requirement 2 The management of Revco Products is exploring four different investment opportunities. Information on the...
requirement 2
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requirement 2
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