Information on four investment proposals is given below: In what order do the proposals in terms of preference according to the profitability index?
A) 3,4,1,2.
B) 1,2,3,4.
C) 1,3,2,4.
D) 2,1,4,3.

Question

Information on four investment proposals is given below:  In what order do the proposals in terms of preference according to the profitability index?
A) 3,4,1,2. 
B) 1,2,3,4. 
C) 1,3,2,4. 
D) 2,1,4,3.

Quizplus · Accepted Answer

According to profitability index (PI), Proposal 3 has the highest PI of 1.5, followed by Proposal 1 with a PI of 1.25, Proposal 2 with a PI of 1.2, and Proposal 4 with a PI of 1.15. Therefore, Proposal 3 is the best choice as it has the highest PI and will likely provide the highest return on investment.

Information on Four Investment Proposals Is Given Below: in What