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 $ (400,000 ) $ (350,000 ) $ (250,000 ) $ (370,000 ) Present value of cash inflows at a 10% discount rate 530,740 442,440 303,280 443,800 Net present value $ 130,740 $ 92,440 $ 53,280 $ 73,800 Life of the project 5 years 10 years 5 years 4 years Internal rate of return 22% 16% 18% 19% 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.

Problem 11-17A Preference Ranking of Investment Projects [LO11-3] The management of Revco Products is exploring four different investment opportunities. Information on the four projects under study follows Project Number 4 Investment required S(400,000) $(350,000) $(250,000) $(370,000) Present value of cash inflows at a 10% discount rate Net present value Life of the project 442,440 92,440 S 53,280 S 73,800 10 years 530,740 303,280 443,800 $ 130,740 years 22% years 18% 4 years 19% Internal rate of returrn 16% Because the company's 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 can't 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