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Oxford Company has limited funds available for investment and must ration the funds among four...

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Accounting

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 Project (years) Internal Rate of Return
A $ 200,000 $ 299,323 7 11%
B $ 146,000 $ 272,000 12 16%
C $ 100,000 $ 230,035 7 15%
D $ 161,000 $ 308,136 3 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.

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