Exercise 12-11 (Algo) Preference Ranking of Investment Projects [LO12-5]Oxford Company has limited funds available for investment and must ration the funds among four competing projects. Selectedinformation on the four projects follows:ProjectABCDInvestmentRequired$ 130,000$ 136,000$ 105,000$ 169,000Presentvalue ofCash Inflows$ 249,323$ 222,000$ 180,035$ 258, 136Required 1 Required 2ProjectLife oftheProject(years)7The net present values should be computed using a 10% discount rate. The company wants your assistance in determining whichproject to accept first, second, and so forth.ABC12Required: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.73Complete this question by entering your answers in the tabs below.ProfitabilityIndexInternalRate ofReturn20%18%19%17%Compute the profitability index for each project. (Round your answers to 2 decimal places.)< Required 1Required 2 >

Solution:-1)Computation of the profitability index for each project as follows under:-Profitability…

Answered: Oxford Company has limited funds…

FINANCIAL ACCOUNTING

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Chapter1: Financial Statements And Business Decisions

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The management of Riker Inc. is exploring five different investment opportunities. Information on the five projects under study follow Project Number Investment required Present value of cash inflows at a 10% discount rate Net present value Life of the project Project 1 2 3 4 5 Profitability Index 1 2 3 $(390,000) $(330,000) $(350,000) 478,490 396,950 $ 88,490 $ 66,950 6 years 3 years First preference Second preference 433,190 $ (83,190) 5 years The company's required rate of return is 10%; thus, a 10% discount rate has been used in the preceding present value computations. Limited funds are available for investment, and so the company cannot accept all of the available projects. Third preference Fourth preference Fifth preference 4 $(330,000) Required: 1. Compute the profitability Index for each investment project. (Round your answers to 2 decimal places.) 300, 100 $ 29,900 12 years 5 $(480,000) 562,860 $82,860 6 years 2. Rank the five projects according to preference, in terms of (a)…
Oxford Company has limited funds available for investment and must ration the funds among the four competing projects shown below: Project InvestmentRequired PresentValue of Cash Inflows Life oftheProject(years) InternalRateof Return A $ 170,000 $ 329,323 7 12% B $ 118,000 $ 302,000 12 17% C $ 105,000 $ 260,035 7 16% D $ 165,000 $ 338,136 3 15% The net present values above have been computed using a 10% discount rate. Required: Compute the profitability index for each project. In order of preference, rank the four projects in terms of net present value, profitability index, and internal rate of return
A.5 Sharp Company has $ 15,000 to invest. The company is trying to decide between two alternative uses of the funds follows: Invest in Project B $15,000 $15,000 $ 4,000 Investment required Annual cash inflows Single cash inflow at the end of 10 Invest in Project A $0 $ 60,000 years Life of the project Sharp Company uses a 16% discount rate. Required: (Ignore income taxes.) Which investment would you recommend that the company accept? Show all computations using net present value. Prepare separate computations for each investment. 10 years 10 years
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 Life of the Project A Investment Required Cash Inflows Project Internal Rate (years) of Return $ 160,000 $ 259,323 7 16% B $ 135,000 $ 232,000 12 18% $ 100,000 $ 190,035 7 D $ 164,000 $ 268,136 3 22% 17% 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 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…
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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 A B C D Investment Required $ 150,000 $ 129,000 $ 103,000 $ 160,000 Present value of Cash Inflows $ 274,323 $ 247,000 $ 205,035 $ 283, 136 Required 1 Required 2 Project Life of 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. A B C D the Internal Rate of Return 15% 20% 19% 18% 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. Project (years) 7 12 Complete this question by entering your answers in the tabs below. Profitability Index 7 3 Compute the profitability index for each project. (Round your answers to 2 decimal places.)
Harris Corporation has provided the following data concerning an investment project that it is considering: Initial investment Annual cash flow Salvage value at the end of the project Expected life of the project Discount rate $ 160,000 $ 54,000 $ 11,000 O $67,000 O $160,516 O $516 O $(5,776) 4 15 per year years % Use Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using the tables provided. The net present value of the project is closest to:
ic Yo NS io cer ist bun ngs nnée Current Attempt in Progress Blossom Manufacturing Co. is evaluating two projects. The company uses payback criteria of three years or less. Project A has a cost of $905,000, and project B's cost is $1,247,300. Cash flows from both projects are given in the following table. Year 1 2 3 4 Project A $86,212 313,562 427,594 285,552 Project B $586,212 413,277 231,199 What are their discounted payback periods? (Round answers to 2 decimal places, e.g. 15.25. If discounted payback period exceeds life of the project, enter 0.00 for the answer.) Discounted payback period of project A Discounted payback period of project B will he accepted with a discount rate of 8 percent? átv zoom
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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