Consider the following projects:
Cash Flows ($) | ||
Project | C0 | C1 |
D | –11,200 | 22,400 |
E | –21,200 | 37,100 |
Assume that the projects are mutually exclusive and that the opportunity cost of capital is 12%.
a. Calculate the profitability index for each project. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Project | Profitability Index |
D | |
E | |
b-1. Calculate the profitability-index using the incremental cash flows. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Profitability-index
b-2. Which project should you choose?
Project D | |
Project E |
Consider the following projects: Cash Flows ($) Project C0 C1 D –11,200 22,400 E –21,200 37,100...
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