Home / Questions / PROBLEM 13 18 Preference Ranking of Investment Project LO4 Yancey Company has limited fund...
PROBLEM 13–18 Preference Ranking of Investment Projects [LO4]
Yancey Company has limited funds available for investment and must ration the funds among four competing projects. Selected information on the four projects follows:
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, which to accept second, and so forth. The company’s investment funds are limited.
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.
c. Internal rate of return.
3. Which ranking do you prefer? Why?
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