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2. (20%) Suppose DEF company has the following two independent investment projects. Year Project A -1600 Project B -2500 0 1 800 500 2 900

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2. (20%) Suppose DEF company has the following two independent investment projects. Year Project A -1600 Project B -2500 0 1 800 500 2 900 1900 3 700 2200 a) Calculate the profitability index (PI) for each of the two projects. The discount rate is 7%. b) Which project should DEF company choose based on the profitability index rule

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