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The management of Revco Products is exploring four different investment opportunities. Information on the four projects under study follows: Project Number 1 2 3 4

The management of Revco Products is exploring four different investment opportunities. Information on the four projects under study follows:

Project Number
1 2 3 4
Investment required $ (630,000 ) $ (580,000 ) $ (430,000 ) $ (550,000 )
Present value of cash inflows at a 10% discount rate 672,900 665,973 538,320 708,680
Net present value $ 42,900 $ 85,973 $ 108,320 $ 158,680
Life of the project 6 years 12 years 6 years 3 years
Internal rate of return 11 % 12 % 17 % 25 %

Because the companys required rate of return is 9%, a 9% discount rate has been used in the present value computations above. 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. (Round your answers to 2 decimal places.)

Project Profitability Index
1
2
3
4

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