Wrikeman Evaluates Future Projects by Using the Profitability Index Which Project Should Wrikeman Select If the Decision Is Based

Wrikeman evaluates future projects by using the profitability index. The company is currently reviewing five similar projects and must choose one of the following: $$\begin{array} { c c c } \text { Project } & \begin{array} { c } \text { Initial } \\\text { Investment }\end{array} & \begin{array} { c } \text { Present Value } \\\text { of Cash Inflows }\end{array} \\1 & \$ 100,000 & \$ 97,000 \\2 & 50,000 & 80,000 \\3 & 75,000 & 110,000 \\4 & 60,000 & 100,000 \\5 & 150,000 & 200,000\end{array}$$ Which project should Wrikeman select if the decision is based entirely on the profitability index?

A) Project 1.
B) Project 2.
C) Project 3.
D) Project 4.
E) Project 5.

Correct Answer:

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