Exercise $12-11($Algo$)$ Preference Ranking of Investment Projects $[$LO$12-5]$

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 Investment Required Present value of Cash Inflows Life of the Project $($years$)$ Internal Rate of Return

A $ $140,000$ $ $254,323717\%$

B $ $140,000$ $ $227,0001221\%$

C $ $103,000$ $ $185,035719\%$

D $ $170,000$ $ $263,136322\%$

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.