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	$	(760,000	)	$	(660,000	)	$	(610,000	)	$	(545,000	)
Present value of cash inflows at a 14% discount rate		795,000			710,000			630,200			579,970
Net present value	$	35,000		$	50,000		$	20,200		$	34,970
Life of the project		9 years			14 years			10 years			3 years
Internal rate of return		15.25%			15.56%			14.84%			17.79%

Because the company%u2019s required rate of return is 14%, a 14% discount rate has been used in the present value computations above.

Required:
1.	Compute the project profitability index for each investment project. (Round your answers to 3 decimal places.)

Project	Profitability Index
1
2
3
4

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

	Net Present Value	Project Profitability Index	Internal Rate of Return
First preference
Second preference
Third preference
Fourth preference