Homework Help is Here – Start Your Trial Now!
Business
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 Internal Project Rate of (years) Return A $ 180,000 $ 314,323 7 11% B $ 144,000 $ 287,000 12 16% C $ 102,000 $ 245,035 7 D $ 160,000 $ 323,136 3 15% 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the profitability index for each project. (Round your answers to 2 decimal places.) Project Profitability Index A B C D Information on four investment proposals is given below: A B Investment required Present value of cash inflows $ (360,000) 506,000 $ (150,000) 210,300 Investment Proposal с $ (130,000) 197,300 Net present value $ 146,000 $ 60,300 $ 67,300 Life of the project 5 years 7 years 6 years Required: D $ (1,200,000) 1,601,100 $ 401,100 6 years 1. Compute the profitability index for each investment proposal. (Round your answers to 2 decimal places.) 2. Rank the proposals in terms of preference. Investment Profitability Proposal Index A B C D Rank Preference

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 Internal Project Rate of (years) Return A $ 180,000 $ 314,323 7 11% B $ 144,000 $ 287,000 12 16% C $ 102,000 $ 245,035 7 D $ 160,000 $ 323,136 3 15% 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the profitability index for each project. (Round your answers to 2 decimal places.) Project Profitability Index A B C D Information on four investment proposals is given below: A B Investment required Present value of cash inflows $ (360,000) 506,000 $ (150,000) 210,300 Investment Proposal с $ (130,000) 197,300 Net present value $ 146,000 $ 60,300 $ 67,300 Life of the project 5 years 7 years 6 years Required: D $ (1,200,000) 1,601,100 $ 401,100 6 years 1. Compute the profitability index for each investment proposal. (Round your answers to 2 decimal places.) 2. Rank the proposals in terms of preference. Investment Profitability Proposal Index A B C D Rank Preference

EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section: Chapter Questions
Problem 11P
See similar textbooks
icon
Related questions
Question
100%
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 Internal Project Rate of (years) Return A $ 180,000 $ 314,323 7 11% B $ 144,000 $ 287,000 12 16% C $ 102,000 $ 245,035 7 D $ 160,000 $ 323,136 3 15% 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the profitability index for each project. (Round your answers to 2 decimal places.) Project Profitability Index A B C D
Transcribed Image Text: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 Internal Project Rate of (years) Return A $ 180,000 $ 314,323 7 11% B $ 144,000 $ 287,000 12 16% C $ 102,000 $ 245,035 7 D $ 160,000 $ 323,136 3 15% 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the profitability index for each project. (Round your answers to 2 decimal places.) Project Profitability Index A B C D
Information on four investment proposals is given below: A B Investment required Present value of cash inflows $ (360,000) 506,000 $ (150,000) 210,300 Investment Proposal с $ (130,000) 197,300 Net present value $ 146,000 $ 60,300 $ 67,300 Life of the project 5 years 7 years 6 years Required: D $ (1,200,000) 1,601,100 $ 401,100 6 years 1. Compute the profitability index for each investment proposal. (Round your answers to 2 decimal places.) 2. Rank the proposals in terms of preference. Investment Profitability Proposal Index A B C D Rank Preference
Transcribed Image Text:Information on four investment proposals is given below: A B Investment required Present value of cash inflows $ (360,000) 506,000 $ (150,000) 210,300 Investment Proposal с $ (130,000) 197,300 Net present value $ 146,000 $ 60,300 $ 67,300 Life of the project 5 years 7 years 6 years Required: D $ (1,200,000) 1,601,100 $ 401,100 6 years 1. Compute the profitability index for each investment proposal. (Round your answers to 2 decimal places.) 2. Rank the proposals in terms of preference. Investment Profitability Proposal Index A B C D Rank Preference
Expert Solution
steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Financial And Managerial Accounting
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
Managerial Accounting
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Century 21 Accounting Multicolumn Journal
Century 21 Accounting Multicolumn Journal
Accounting
ISBN:
9781337679503
Author:
Gilbertson
Publisher:
Cengage
Century 21 Accounting General Journal
Century 21 Accounting General Journal
Accounting
ISBN:
9781337680059
Author:
Gilbertson
Publisher:
Cengage
Intermediate Financial Management (MindTap Course…
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning
SEE MORE TEXTBOOKS