EXERCISE 7-11 Preference Ranking of investment Projects L07-5 Oxford Company has...
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EXERCISE 7-11 Preference Ranking of investment Projects L07-5 Oxford Company has limited funds available for investment and must ration the funds among four competing projects. Selected information on the four projects follows: Net Present Value Life of the Project (years) Internal Rate of Return Project A.... B. C. D. Investment Required $160,000 $135,000 $100,000 $175,000 $44,323 $42,000 $35,035 $38,136 7 12 7 3 18% 16% 20% 22% 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, second, and so forth. Required: 1. Compute the project profitability index for each project. 2. In order of preference, rank the four projects in terms of: Net present value. b. Project profitability index. Internal rate of return. 3. Which ranking do you prefer? Why? a. C
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