Oxford company has limited funds available for investment, Ask an Expert

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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?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9798555

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