Oxford Company has limited funds available for investment and must ration the funds among four competing projects. Selected information on the four projects follows: Present Life of the Internal Investment Value of Cash Project Project Required Inflows (years) Rate of Return A $200,000 $294,323 7 16% B $ 137,000 $267,000 12 21% C$ 104,000 $225,035 7 20% D $167,000 $ 303,136 19% 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. Note: Round your answers to 2 decimal places. Profitability Project Index A B C D In order of preference, rank the four projects in terms of net present value, profitability index, and internal rate of return. Net Present Value Profitability Index Internal Rate of Return First preference Second preference Third preference Fourth preference
Oxford Company has limited funds available for investment and must ration the funds among four competing projects. Selected information on the four projects follows: Present Life of the Internal Investment Value of Cash Project Project Required Inflows (years) Rate of Return A $200,000 $294,323 7 16% B $ 137,000 $267,000 12 21% C$ 104,000 $225,035 7 20% D $167,000 $ 303,136 19% 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. Note: Round your answers to 2 decimal places. Profitability Project Index A B C D In order of preference, rank the four projects in terms of net present value, profitability index, and internal rate of return. Net Present Value Profitability Index Internal Rate of Return First preference Second preference Third preference Fourth preference
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Dividend Policy
A dividend is a part of the profit paid to the shareholder in an organization. The management of the organization has the right to decide the policy for giving a dividend from the earnings to the shareholder. However, an organization is not in the obligation to declare a dividend for the investor. Dividend policy differs from organization to organization. As the management has the only authority to decide dividend rate, dividend amount, and time of dividend payout by considering all other elements that create an impact on the payment of a dividend.
Stocks And Dividends
Stock or equities are generally sold and bought in the Stock Exchange or which is popularly known as the stock market. Stocks are issued in the Stock Exchange for the sole purpose of raising funds for the Corporation or the company itself. Now since an individual has purchased a portion of the Corporation or company, he or she may claim to be a part of the earnings or profit of the company.
Question
Transcribed Image Text:Oxford Company has limited funds available for investment and must ration the funds among four competing projects. Selected
information on the four projects follows:
Investment
Present
Value of Cash
Life of
the
Project
Internal
Rate
Project
Required
A
$ 200,000
Inflows
$294,323
(years)
of Return
7
16%
B
$ 137,000
$ 267,000
с
$ 104,000
$225,035
D
$ 167,000
$ 303,136
12
7
3
21%
20%
19%
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.
Note: Round your answers to 2 decimal places.
Project
Profitability
Index
A
B
C
D
In order of preference, rank the four projects in terms of net present value, profitability index, and internal rate of return.
Net Present
Value
Internal Rate
Profitability
Index
of Return
First preference
Second preference
Third preference
Fourth preference
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