Janesville 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 ............	$(500,000)	$(450,000)	$(220,000)	$(470,000)
Present value of cash inflows at a 10% discount rate ........	586,080	522,000	266,400	616,650
Net present value ................	$ 86,080	$ 72,000	$ 46,400	$ 146,650
Life of the project ................	9 years	18 years	9 years	6 years
Internal rate of return ..........	16%	15%	17%	22%

Because the companys required rate of return is 12%, a 12% discount rate has been used in the present value computations. 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:

a. Net present value.

b. Project profitability index.

c. Internal rate of return.

3. Which ranking do you prefer? Why?