Oxford Company has limited funds available for investment and must ration the funds among five competing projects.

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Oxford Company has limited funds available for investment and must ration the funds among five competing projects. Selected information on the five projects follows:

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The net present values above have been computed using a 10% discount rate. The company wants your assistance in determining which project to accept first, which to accept second, and so on.

Required:

1. Compute the profitability index for each project.

2. In order of preference, rank the five projects in terms of

a. Net present value.

b. Profitability index.

3. Which ranking do you prefer? Why?

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Related Book For  book-img-for-question

Introduction to Managerial Accounting

ISBN: 978-1259105708

5th Canadian edition

Authors: Peter C. Brewer, Ray H. Garrison, Eric Noreen, Suresh Kalagnanam, Ganesh Vaidyanathan

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