Oxford Company has limited funds available for investment and must information on the four projects follows: Project Investment Required Present value of Cash Inflows Life of the Project Internal Rate of (years) Return A $ 130,000 $ 219,323 7 21% B $ 107,000 $ 192,000 12 17% C $ 100,000 $ 150,035 7 16% D $ 174,000 $ 228,136 3 22% es The net present values should be 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 profitability index for each project 2. In order of preference, rank the four projects in terms of net present value, profitability index, and internal rate of return.
Oxford Company has limited funds available for investment and must information on the four projects follows: Project Investment Required Present value of Cash Inflows Life of the Project Internal Rate of (years) Return A $ 130,000 $ 219,323 7 21% B $ 107,000 $ 192,000 12 17% C $ 100,000 $ 150,035 7 16% D $ 174,000 $ 228,136 3 22% es The net present values should be 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 profitability index for each project 2. In order of preference, rank the four projects in terms of net present value, profitability index, and internal rate of return.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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