Preference ranking of investment projects

Assignment Help Accounting Basics

Reference no: EM13956012

Preference Ranking of Investment Projects

Since limited funds are available for investment, Yancy & Company must ration the funds among four competing projects. Selected information on the four projects follows:

Project	Investment Required	Net PresentValue	Life of theProject (years)	Internal Rate of Return
A	$800,000	$ 221,615	7	18%
B	675,000	210,000	12	16%
C	500,000	175,175	7	20%
D	700,000	152,544	3	22%

The net present values above have been computed using a 10% discount rate. The company wants your assistance in determining which project to accept first, which to accept second, and so forth. The company's investment funds are limited.

Required:

1. Compute the project profitability index for each project.

2. In order of preference, rank the four projects in terms of

a. Net present value.

b. Project profitability index.

c. IRR.

3. Which ranking do you prefer? Why?

Reference no: EM13956012

Questions Cloud

El bulli: the taste of innovation : Read the case which can be found on the iTunes U course shell and write a brief case analysis about the organization. A case analysis is NOT a summary, but rather an in depth examination of the concepts described as they relate to the course conte..

A company is applying for a line of credit at a bank : Discuss why a current ratio of 2 to 1 might indicate problems for the company.

Simple rate of return and payback analysis of two machines : Blue Ridge Furniture is considering purchasing two different items of equipment, as described below: Machine A. A machine has just come onto the market that compresses sawdust into various shelving products. Currently, the sawdust is disposed of as..

On average what would the length of the line be : If the owner wants to lease some new equipment for the oil change outlet so that the average customer spends 15 minutes in the system what level or speed of service rate must the oil change crew deliver?

Preference ranking of investment projects : Since limited funds are available for investment, Yancy & Company must ration the funds among four competing projects. Selected information on the four projects follows:

How do they demonstrate newton second law : Fill in the following table, using the value of a obtained from the simulation. Record and calculate data to the nearest three decimal places. The masses in the table are in kg, but the input data are in grams, so make the necessary conversions. ..

Propose a scenario to reduce your clients tax liability : Propose a scenario to reduce your clients tax liability by changing U.S. Source income into foreign source income in a way that will not generate any additional foreign tax.

Explain binomial and normal distribution : What is the probability that the auto dealer will need to order more transmissions? You should take your calculations to 4 decimal places.

How should lauden deal with this situation : Assuming that Orvieto Industries causes a disproportionate amount of indirect service costs, how should Lauden deal with this situation?

User Account

All Pages