Exercise 14-11 (Algo) Preference Ranking of Investment Projects [LO14-5]

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	$	200,000	$	234,323	7	22	%
B	$	118,000	$	207,000	12	19	%
C	$	103,000	$	165,035	7	20	%
D	$	162,000	$	243,136	3	17	%

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.