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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

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 $ 120,000 $ 214,323 7 17%
B $ 143,000 $ 187,000 12 18%
C $ 105,000 $ 145,035 7 20%
D $ 171,000 $ 223,136 3 16%

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.

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