Austin Company is investigating four different investment opportunities. Information on the four projects under study is given below:

Project Number

	1			2			3			4
Investment required	$	(480,000	)	$	(360,000	)	$	(270,000	)	$	(450,000	)
Present value of cash inflows at a 10% discount rate		567,270			433,400			336,140			522,970
Net present value	$	87,270		$	73,400		$	66,140		$	72,970
Life of the project		6 years			12 years			6 years			3 years
Internal rate of return		16%			14%			18%			19%

Because the companys required rate of return is 10%, a 10% discount rate has been used in the present value computations on the prior page. Limited funds are available for investment, so the company cant accept all of the available projects.

Required:

1.

Compute the project profitability index for each investment project.

2.	Rank the four projects according to preference, in terms of net present value, project profitability index and internal rate of return.