Exercise 14-11 (Algo) Preference Ranking of Investment Projects [LO14-5] 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 Internal Rate (years) of Return A $120,000 $214,323 7 17% B $ 143,000 $ 187,000 12 18% C $ 105,000 $ 145,035 7 20% ces D $ 171,000 $ 223,136 3 16% 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the profitability index for each project. (Round your answers to 2 decimal places.) Project Profitability Index A B
Exercise 14-11 (Algo) Preference Ranking of Investment Projects [LO14-5] 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 Internal Rate (years) of Return A $120,000 $214,323 7 17% B $ 143,000 $ 187,000 12 18% C $ 105,000 $ 145,035 7 20% ces D $ 171,000 $ 223,136 3 16% 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the profitability index for each project. (Round your answers to 2 decimal places.) Project Profitability Index A B
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
None
![Exercise 14-11 (Algo) Preference Ranking of Investment Projects [LO14-5]
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
Internal
Rate
(years)
of Return
A
$120,000
$214,323
7
17%
B
$ 143,000
$ 187,000
12
18%
C
$ 105,000 $ 145,035
7
20%
ces
D
$ 171,000
$ 223,136
3
16%
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.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Compute the profitability index for each project. (Round your answers to 2 decimal places.)
Project
Profitability
Index
A
B](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0160aa38-4eca-4f92-9c0e-ff5d664690ce%2Fe8563a19-53fc-4ddb-a97d-4f7b463a0686%2Fhkbgwlt_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Exercise 14-11 (Algo) Preference Ranking of Investment Projects [LO14-5]
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
Internal
Rate
(years)
of Return
A
$120,000
$214,323
7
17%
B
$ 143,000
$ 187,000
12
18%
C
$ 105,000 $ 145,035
7
20%
ces
D
$ 171,000
$ 223,136
3
16%
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.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Compute the profitability index for each project. (Round your answers to 2 decimal places.)
Project
Profitability
Index
A
B
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education