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 Investment Value of Project Required Cash Inflows. A $ 269,323 S 242,000 $ 200,035 $ 278,136 B C D $ 180,000 $ 130,000 $ 100,000 $ 160,000 Life of the Project (years) 7 12 7 3 Internal Rate of Return 15% 20% 19% 18% 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 ration the funds among four competing projects. Selected information on the four projects follows: Present Investment Value of Project Required Cash Inflows. A $ 269,323 S 242,000 $ 200,035 $ 278,136 B C D $ 180,000 $ 130,000 $ 100,000 $ 160,000 Life of the Project (years) 7 12 7 3 Internal Rate of Return 15% 20% 19% 18% 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
Related questions
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:
Present
Value of
Investment
Project Required
Cash Inflows
A
$ 180,000
$ 269,323
B
$ 130,000
$ 242,000
C
$ 100,000
$ 200,035
D
$ 160,000 $ 278,136
Life of
the
Project
(years)
7
12
7
3
Internal
Rate
of Return
15%
20%
19%
18%
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.
A
2. In order of preference, rank the four projects in terms of net present value, profitability index, and internal rate of return.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6fbab9b7-48a7-414f-a7ed-24bae52e8ebe%2Fe5d5603a-bed9-4e06-aa87-607b9b439a10%2F66ehc4v_processed.jpeg&w=3840&q=75)
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:
Present
Value of
Investment
Project Required
Cash Inflows
A
$ 180,000
$ 269,323
B
$ 130,000
$ 242,000
C
$ 100,000
$ 200,035
D
$ 160,000 $ 278,136
Life of
the
Project
(years)
7
12
7
3
Internal
Rate
of Return
15%
20%
19%
18%
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.
A
2. In order of preference, rank the four projects in terms of net present value, profitability index, and internal rate of return.
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