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	$ (270,000)		$ (450,000)		$ (360,000)		$ (480,000)
Present value of cash inflows	336,140		522,970		433,400		567,270
Net present value	$ 66,140		$ 72,970		$ 73,400		$ 87,270
Life of the project	6	years	3	years	12	years	6	years
Internal rate of return	18%		19%		14%		16%

The net present values above have been computed using a 10% discount rate. Limited funds are available for investment, so the company cant accept all of the available projects.

Required:

1. Compute the profitability index for each investment project.

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

Compute the profitability index for each investment project. (Round your answers to 2 dec Rank the four projects according to preference, in terms of net present value, profitability