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Oxford Company has limited funds available for investment and must ration the funds among four competing projects. Selected information on the four...

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 Net
Present
Value Life of
the
Project
(years) Internal
Rate
of Return
(percent)
A $160,000 $44,323 7 18%
B $135,000 $42,000 12 16%
C $100,000 $35,035 7 20%
D $175,000 $38,136 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, second, and so forth.

Requirement 1:
Compute the project profitability index for each project. (Round your answers to 2 decimal places.)

Project Profitability
index
A
B
C
D

Requirement 2:

In order of preference, rank the four projects in terms of Net present value, Project profitability index and Internal rate of return.

Net Present
Value Project
Profitability Index Internal Rate of
Return
First preference
Second preference
Third preference
Fourth preference
Check My WorkReferences
Worksheet Difficulty: Basic Learning Objective: 14-4


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