Course Solutions Uncategorized (Answered) : Problem 13 21 Preference Ranking Investment Projects Lo13 5 Management Revco Products Expl Q28211813

(Answered) : Problem 13 21 Preference Ranking Investment Projects Lo13 5 Management Revco Products Expl Q28211813

PROBLEM 13–21 Preference Ranking of InvestmentProjects [LO13–5]

The management of Revco Products is exploring four differentinvestment opportunities. Information on the four projects understudy follows:

Project Number 2 4 $(270,000) $(450,000) $(360,000) $(480,000) Investment required Present value of cash inflows at a 10% 336,140 522,970 433,400 567,270 $ 66,140 $ 72,970 $ 73,400 $ 87,270 6 years Net present value Life of the project . Internal rate of return . . . 6 years 18% 3 years 19% 12 years 14% 1696

Because the company’s required rate of return is 10%, a 10%discount rate has been used in the present value

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