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The management of Revco Products is exploring four different investment opportunities. Information on the four...

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Accounting

The management of Revco Products is exploring four different investment opportunities. Information on the four projects under study follows:
Project Number
1234
Investment required $ (270,000) $ (450,000) $ (360,000) $ (480,000)
Present value of cash inflows 336,140522,970433,400567,270
Net present value $ 66,140 $ 72,970 $ 73,400 $ 87,270
Life of the project 6 years 3 years 12 years 6 years
Internal rate of return 18%19%14%16%
The net present values above have been computed using a 10% discount rate. Limited funds are available for investment, so the company cant accept all of the available projects.
Required:
Compute the profitability index for each investment project.
Rank the four projects according to preference, in terms of net present value, profitability index, and internal rate of return.

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