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 $ (470,000 ) $ (420,000 ) $ (320,000 ) $ (440,000 ) Present value of cash inflows at a 12% discount rate 616,650 507,908 452,210 528,440 Net present value $ 146,650 $ 87,908 $ 132,210 $ 88,440 Life of the project 6 years 12 years 6 years 3 years Internal rate of return 22% 16% 26% 23% Because the companys required rate of return is 12%, a 12% 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.)

2. Rank the four projects according to preference, in terms of net present value, project profitability index and internal rate of return.