(Ignore income taxes in this problem.) Altro Corporation is considering the following three investment projects:
-Rank the projects according to the profitability index,from most profitable to least profitable.

Question

(Ignore income taxes in this problem.) Altro Corporation is considering the following three investment projects: 
-Rank the projects according to the profitability index,from most profitable to least profitable.

Quizplus · Accepted Answer

Profitability index = Present value of future cash flows / Initial investmentProject S: Profitability index = 1.5Project T: Profitability index = 1.2Project R: Profitability index = 1.1Therefore, the ranking from most profitable to least profitable is: S, T, R.

(Ignore Income Taxes in This Problem