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Compute the profitability index for the project below The discount rate is 9.0% Time 0 1 2 3 4 CFs -12,000 10,000 8,000 8,000 6,500
| Compute the profitability index for the project below | |||||||
| The discount rate is | 9.0% | ||||||
| Time | 0 | 1 | 2 | 3 | 4 | ||
| CFs | -12,000 | 10,000 | 8,000 | 8,000 | 6,500 | ||
| Suppose another potential project with the same initial cost has a profitability index of 1.25. | |||||||
| If the firm can only afford to invest in one project right now, which project should the company pursue? (this project, other project) | |||||||
| Explain your answer. | |||||||
| SHOW WORK HERE, HIGHLIGHT FINAL ANSWER IN YELLOW | |||||||
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