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Oxford Company has limited funds available for investment and must ration the funds among four competing projects. Selected information on the four projects follows: Project Investment Required Present value of Cash Inflows Life of the Internal Project Rate of (years) Return A $ 180,000 $ 314,323 7 11% B $ 144,000 $ 287,000 12 16% C $ 102,000 $ 245,035 7 D $ 160,000 $ 323,136 3 15% 14% The net present values should be computed using a 10% discount rate. The company wants your assistance in determining which project to accept first, second, and so forth. Required: 1. Compute the profitability index for each project. 2. In order of preference, rank the four projects in terms of net present value, profitability index, and internal rate of return. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the profitability index for each project. (Round your answers to 2 decimal places.) Project Profitability Index A B C D Information on four investment proposals is given below: A B Investment required Present value of cash inflows $ (360,000) 506,000 $ (150,000) 210,300 Investment Proposal с $ (130,000) 197,300 Net present value $ 146,000 $ 60,300 $ 67,300 Life of the project 5 years 7 years 6 years Required: D $ (1,200,000) 1,601,100 $ 401,100 6 years 1. Compute the profitability index for each investment proposal. (Round your answers to 2 decimal places.) 2. Rank the proposals in terms of preference. Investment Profitability Proposal Index A B C D Rank Preference

Oxford Company has limited funds available for investment and must ration the funds among four competing projects. Selected information on the four projects follows: Project Investment Required Present value of Cash Inflows Life of the Internal Project Rate of (years) Return A $ 180,000 $ 314,323 7 11% B $ 144,000 $ 287,000 12 16% C $ 102,000 $ 245,035 7 D $ 160,000 $ 323,136 3 15% 14% The net present values should be computed using a 10% discount rate. The company wants your assistance in determining which project to accept first, second, and so forth. Required: 1. Compute the profitability index for each project. 2. In order of preference, rank the four projects in terms of net present value, profitability index, and internal rate of return. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the profitability index for each project. (Round your answers to 2 decimal places.) Project Profitability Index A B C D Information on four investment proposals is given below: A B Investment required Present value of cash inflows $ (360,000) 506,000 $ (150,000) 210,300 Investment Proposal с $ (130,000) 197,300 Net present value $ 146,000 $ 60,300 $ 67,300 Life of the project 5 years 7 years 6 years Required: D $ (1,200,000) 1,601,100 $ 401,100 6 years 1. Compute the profitability index for each investment proposal. (Round your answers to 2 decimal places.) 2. Rank the proposals in terms of preference. Investment Profitability Proposal Index A B C D Rank Preference

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Oxford Company has limited funds available for investment and must ration the funds among four competing projects. Selected information on the four projects follows: Project Investment Required Present value of Cash Inflows Life of the Internal Project Rate of (years) Return A $ 180,000 $ 314,323 7 11% B $ 144,000 $ 287,000 12 16% C $ 102,000 $ 245,035 7 D $ 160,000 $ 323,136 3 15% 14% The net present values should be computed using a 10% discount rate. The company wants your assistance in determining which project to accept first, second, and so forth. Required: 1. Compute the profitability index for each project. 2. In order of preference, rank the four projects in terms of net present value, profitability index, and internal rate of return. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the profitability index for each project. (Round your answers to 2 decimal places.) Project Profitability Index A B C D
Transcribed Image Text:Oxford Company has limited funds available for investment and must ration the funds among four competing projects. Selected information on the four projects follows: Project Investment Required Present value of Cash Inflows Life of the Internal Project Rate of (years) Return A $ 180,000 $ 314,323 7 11% B $ 144,000 $ 287,000 12 16% C $ 102,000 $ 245,035 7 D $ 160,000 $ 323,136 3 15% 14% The net present values should be computed using a 10% discount rate. The company wants your assistance in determining which project to accept first, second, and so forth. Required: 1. Compute the profitability index for each project. 2. In order of preference, rank the four projects in terms of net present value, profitability index, and internal rate of return. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the profitability index for each project. (Round your answers to 2 decimal places.) Project Profitability Index A B C D
Information on four investment proposals is given below: A B Investment required Present value of cash inflows $ (360,000) 506,000 $ (150,000) 210,300 Investment Proposal с $ (130,000) 197,300 Net present value $ 146,000 $ 60,300 $ 67,300 Life of the project 5 years 7 years 6 years Required: D $ (1,200,000) 1,601,100 $ 401,100 6 years 1. Compute the profitability index for each investment proposal. (Round your answers to 2 decimal places.) 2. Rank the proposals in terms of preference. Investment Profitability Proposal Index A B C D Rank Preference
Transcribed Image Text:Information on four investment proposals is given below: A B Investment required Present value of cash inflows $ (360,000) 506,000 $ (150,000) 210,300 Investment Proposal с $ (130,000) 197,300 Net present value $ 146,000 $ 60,300 $ 67,300 Life of the project 5 years 7 years 6 years Required: D $ (1,200,000) 1,601,100 $ 401,100 6 years 1. Compute the profitability index for each investment proposal. (Round your answers to 2 decimal places.) 2. Rank the proposals in terms of preference. Investment Profitability Proposal Index A B C D Rank Preference
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