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

Because the companys required rate of return is 10%, a 10% 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.

Project Number 2 3 4 Investment required $(410,000) $(360,000) $(260,000) $(380,000) 79,050 415,654 Present value of cash inflows at a 10% discount rate Net present value Life of the project 326,625 447,660 $ 69,050 $ 55,654 66,625 67,660 6 years12 years6 years 3 years Internal rate of return 16% 13% 18% 20%