Question

Manufacturing is considering three capital investment proposals. At this​ time, Britton only has funds available to pursue one of the three investments. LOADING...​(Click the icon to review the​ proposals.) Which investment should Britton pursue at this​ time? Why?

Answer 1

Answer:

The right project will be sorted by the use of the Profitability Index.

Explanation:

Since all three capital investment proposals have a positive Net Present Value, we have to use profitability index to ascertain which project is most profitable by following the steps below.

1. Divide the N.P.V of each project by the initial investment of the project

2. Rank the answer from the highest ratio to the least.

3. The project with the highest Profitability Index is to be selected for the investment.