Respuesta :
Is Shaylee able to invest in all of these projects simultaneously is no. Since the company has limited excess of money i.e. 2 Million to invest.
What is probability index?
The present value of benefits for each dollar of investment is calculated using the profitability index approach. In other words, it involves the ratio that is produced by comparing the ratio of the initial investment to the present value of future cash flows from a project.
A solid investment is one with a profitability index of greater than 1.0, with higher values indicating more alluring enterprises.
The ratio between the initial investment and the present value of future cash flows is measured by the profitability index (PI). The index can be used to rate investment projects and display the value produced per investment dollar.
Profitability Index = Present Value of Cash INflows / Present Value of Cash Outflows
Project : Profitability Index
A : 1.8434 (765,000 / 415,000)
B : 1.8043 (415,000 / 230,000)
C : 1.6667 (1200,000 / 720,000)
D : 1.6508 (1560,000 / 945,000)
Order of Preference
Project - Order of Preference
A - First Preference
B - Second Preference
C - Third Preference
D - Fourth Preference
To know more about probability index check the below link:
https://brainly.com/question/28335609
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