Oxford Company has limited funds available for investment and must ration the funds among the four...
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Oxford Company has limited funds available for investment and must ration the funds among the four competing projects shown below: Project Investment Required Present Value of Cash Inflows Life of the Project (years) Internal Rate of Return A $ 140,000 $254,323 7 17% B $ 140,000 $227,000 12 21% C $ 103,000 $ 185,035 7 19% D $ 170,000 $263,136 3 22% The net present values above have been computed using a 10% discount rate. 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. Oxford Company has limited funds available for investment and must ration the funds among the four competing projects shown below: Project Investment Required Present Value of Cash Inflows Life of the Project (years) Internal Rate of Return A $ 140,000 $254,323 7 17% B $ 140,000 $227,000 12 21% C $ 103,000 $ 185,035 7 19% D $ 170,000 $263,136 3 22% The net present values above have been computed using a 10% discount rate. 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.
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