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10.43 You are analyzing two proposed capital investments with the following cash flows: Year Project X Project Y 0 - $20,000 7270 1 13,030 7270
10.43
You are analyzing two proposed capital investments with the following cash flows:
Year Project X Project Y
0 - $20,000 7270
1 13,030 7270
2 6,360 7270
3 5,860 7270
4 2,020 7270
The cost of capital for both projects is 10 percent.
Calculate the profitability index (PI) for each project. (Do not round discount factors. Round intermediate calculations to 2 decimal places, e.g. 15.25 and final answer to 4 decimal places, e.g. 1.2527.)
The PI for project X is
and the PI for project Y is
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