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Compute the project profitability index for each project

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Reference no: EM132430303

Question - Limited funds available for investment and must ration the funds among four competing projects.

Project

Investment Required

Net Present Value

Life of the Project (years)

Internal Rate

of Return

A

$870,000

$269,397

6

20%

B

$680,000

$304,429

11

19%

C

$570,000

$121,661

6

17%

D

$770,000

$245,189

4

24%

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, project profitability index and internal rate of return.

Reference no: EM132430303

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