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The management of Revco Products is exploring four different investment opportunities. Information on the four projects under study follows:

	Project Number
	1			2			3			4
Investment required	$	(620,000	)	$	(510,000	)	$	(420,000	)	$	(310,000	)
Present value of cash inflows at a 8% discount rate		697,217			655,640			499,270			386,488
Net present value	$	77,217		$	145,640		$	79,270		$	76,488
Life of the project		6 years			12 years			6 years			3 years
Internal rate of return		12	%		13	%		14	%		21	%

Because the companys required rate of return is 8%, a 8% discount rate has been used in the present value computations above. Limited funds are available for investment, so the company cant accept all of the available projects.

Required:

1. Compute the project profitability index for each investment project.

2. Rank the four projects according to preference, in terms of net present value, project profitability index and internal rate of return.

The management of Revco Products is exploring four different investment opportunities. Information on the four projects under study follows: Proiect Number Investment required Present value of cash inflows at a $(620,000) (510,000) (420,000 (310,000) 8% discount rate Net present value Life of the project Internal rate of return 697.217 $ 77,217 6 years 499,270 145,640 79,27076,488 6 years 655,640 386,488 12 years 3 years 12% 13% 14% 21% Because the company's required rate of return is 8%, a 8% discount rate has been used in the present value computations above Limited funds are available for investment, so the company can't accept all of the available projects Required 1. Compute the project profitability index for each investment project. 2. Rank the four projects according to preference, in terms of net present value, project profitability index and internal rate of return Complete this question by entering your answers in the tabs below. Required 1Required 2 Compute the project profitability index for each investment project. (Round your answers to 2 decimal places.) Profitability ProjectIndex 2 4 The management of Revco Products is exploring four different investment opportunities. Information on the four projects under study follows Proiect Number 2 Investment required Present value of cash inflows at a $ (620,000) $(510,000) (420,000)(310,000) 386,488 $ 77,217 145,640 79,270 76,488 3 years 697,217 655,640 499,270 8 discount rate Net present value Life of the project Internal rate of return 6 years 12 years 6 years 14 12% 13% 21% Because the company's required rate of return is 8%, a 8% discount rate has been used in the present value computations above Limited funds are available for investment, so the company can't accept all of the available projects Required 1. Compute the project profitability index for each investment project. 2. Rank the four projects according to preference, in terms of net present value, project profitability index and internal rate of returrn Complete this question by entering your answers in the tabs below Required 1 Required 2 Rank the four projects according to preference, in terms of net present value, project profitability index and internal rate of return Project Net Present Profitblity of Return Internal Rate Value Index First preference Second reference Third preference Fourth preference

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