EXERCISE 12-9 Preference Ranking of Investment Projects (LO2) Lake Union Yacht Brokers is investigating five different investment opportunities. Information on the five projects under study is given on the next page: Problems Project Number 3 4 5 Investment required.. Present value of cash inflows at a 10% discount rate.. - $(480,000) $(360,000) $(270,000) $(450,000) $ (400,000) 567,270 433,400 336,140 522,970 379,760 Net present value.... $ 87,270 $ 73,400 66,140 $ 72,970 $ (20,240) Life of the project.. 6 years 12 years 6 years 3 years 5 years Since the company 's required rate of return is 10 % , a 10 % discount rate has been used in the present value computations above. Limited funds are available for investment, so the company can't accept all of the available projects. Required: 1. Compute the profitability index for each investment project. 2. Rank the five projects according to preference, in terms of: Net present value b. Profitability index. 3. Which ranking do you prefer? Why? a. imple Rate of Return Computations (LO3, LO4)