Solution-Compute the profitability index for each project

Compute the profitability index for each project

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Reference no: EM133077036

Question - Preference Ranking of Investment Projects - Oxford Company has limited funds available for investment and must ration the funds among four competing projects. Selected information on the four projects follows:

Project	Investment Required	Present Value of Cash Inflows	Life of the Project (years)	Internal Rate of Return
A	$180,000	$224,323	7	21%
B	$151,000	$197,000	12	18%
C	$102,000	$155,035	7	17%
D	$161,000	$233,136	3	16%

The net present values should be computed using a 10% discount rate. The company wants your assistance in determining which project to accept first, second, and so forth.

Required -

1. Compute the profitability index for each project.

2. In order of preference, rank the four projects in terms of net present value, profitability index, and internal rate of return.

Reference no: EM133077036

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Compute the profitability index for each project

Reference no: EM133077036

Reference no: EM133077036

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