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	$	(600,000	)	$	(550,000	)	$	(400,000	)	$	(330,000	)
Present value of cash inflows at a 8% discount rate		636,923			625,441			453,013			412,220
Net present value	$	36,923		$	75,441		$	53,013		$	82,220
Life of the project		6 years			12 years			6 years			3 years
Internal rate of return		10	%		11	%		12	%		21	%

Because the companys required rate of return is 8%, a 8% 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.

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

Required 1 Required 2 Compute the project profitability index for each investment project. (Round your answers to 2 decimal places.) Project Profitability Index 1 1.06 2 1.14 3 1.13 4 1.25 Required 1 Required 2 Rank the four projects according to preference, in terms of net present value, project profitability index and internal rate of return. Net Present Value Project Profitability Index Internal Rate of Return 4 4 3 First preference 4 Second preference 2 Third preference 3 Fourth preference 1 WN 2 1 1