Oxford Company has limited funds available for investment and must ration the fu

Question

Oxford Company has limited funds available for investment and must ration the funds among four competing projects. Selected information on the four projects follows Life of Net the Internal Investment Present Project Rate Project Required Value (years) of Return $810,000 $249,772 $650,000 $214,263 13 $510,000 $178,053 $710,000 $154,572 18% 16% 19% 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 Required: 1. Compute the project profitability index for each project. 2. In order of preference, rank the four projects 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 project. (Round your answers to 2 decimal places.) Project Project Profitability Index

Explanation / Answer

Project Profitability index: Project A 1.31 =(810000+249772)/810000 Project B 1.33 =(650000+214263)/650000 Project C 1.35 =(510000+178053)/510000 Project D 1.22 =(710000+154572)/710000 Net present value Project Profitability index Internal rate of return First preference A C D Second preference B B C Third preference C A A Fourth preference D D B

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