Yancey Company has limited funds available for investment and must ration the funds among four competing projects. Selected information on the four projects follows:

The net present values above have been computed using a 10% discount rate. The company wants your assistance in determining which project to accept first, which to accept second, and so forth. The company€™s investment funds are limited.
Required:
1. Compute the project profitability index for each project.
2. In order of preference, rank the four projects in terms of:
a. net present value.
b. Project profitability index.
c. Internal rate of return.
3. Which ranking do you prefer?Why?

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Life of the Net Internal Investment Present Project Rate of Required Value (years) Return Project $800,000 $221,615 7 $675,000 $210,000 12 $500,000 $175,175 7 $700,000 $152,544 3 22% 18% 16% 20% C. D.$