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 $ $
B $ $
C $ $
D $ $
The net present values should be computed using a discount rate. The company wants your assistance in determining which project to accept first, second, and so forth.
Required:
Compute the profitability index for each project.
In order of preference, rank the four projects in terms of net present value, profitability index, and internal rate of return.
