Oxford company has limited funds available for investment

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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:

Net Present Value

Life of the Project (years)


A...........

$120,000

$30,000

9


B...........

$215,000

$43,000

15


C...........

$162,000

$45,360

14


D...........

$130,000

$39,000

6

The company wants your assistance in ranking the desirability of the projects.

Required:

1. Compute the project profitability index for each project.

2. In order of preference, rank the four projects in terms of:

a. Net present value.

b. Project profitability index.

3. Which ranking do you prefer? Why?

Reference no: EM13483379

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