Information on four investment projects being investigated by Clenning Company
Information on four investment projects being investigated by Clenning Company is as follows:
Since the company’s required rate of return is 10%, a 10% discount rate has been used in the present value computations above. Limited funds are available for investment, so the company can’t accept all of the available projects.
Required:
1. Compute the project profitability index for each investment project.
2. Rank the four projects according to preference, in terms of
a. Net present value.
b. Project profitability index.
c. IRR.
3. Which ranking do you prefer? Why?
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