The Following Information Is Provided by Chelsa Building Systems Calculate the Profitability Index for Project B

question 14

Essay

The following information is provided by Chelsa Building Systems:
$$\begin{array} { l l l l l } & \text { Project A } & \text { Project B } & \text { Project C } & \text { Project D } \\\text { Initial investment } & \$ 438,000 & \$ 218,000 & \$ 560,000 & \$ 516,000 \\\text { PV of cash inflows } & \$ 582,000 & \$ 388,000 & \$ 800,000 & \$ 394,000 \\\text { Payback period (years) } & 3.6 & 3.2 & 4.0 & 2.0 \\\text { NPV of project } & \$ 144,000 & \$ 170,000 & \$ 240,000 & ( \$ 122,000 )\end{array}$$ Calculate the profitability index for Project B.Show your calculations and round to two decimal places.

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