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Mathematics, 25.04.2020 07:15 kaliloabousjbf

20. The management of Eversman Corporation is considering the following three investment projects:
Items Project U Project V Project W
Investment required ($27,000) ($44,000) ($72,000)
Present value of cash inflows $27,000 $49,720 $78,480

Rank the projects according to the profitability index, from most profitable to least profitable.
a. V, U,W
b. U, W,V
c. W, V,U
d. V, W,U
Project U's profitability index is 0.03 ($810 ÷ $27,000), project V's is 0.13 ($5,720 ÷ $44,000) and project W's is 0.09 ($6,480 ÷ $72,000). Therefore the projects are ranked as follows: V, W, and U.

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20. The management of Eversman Corporation is considering the following three investment projects:
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