Calculating Profitability Index Suppose the following two independent investment opportunities are available to Greenplain Ltd. The appropriate

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Calculating Profitability Index Suppose the following two independent investment opportunities are available to Greenplain Ltd. The appropriate discount rate is 10 per cent.

Year Project Alpha (€)

Project Beta (€)

0 –500 –2,000 1 300 300 2 700 1,800 3 600 1,700

(a) Compute the profitability index for each of the two projects.

(b) Which project(s) should Greenplain accept based on the profitability index rule?

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