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Consider the following projects: Cash Flows, $ Project C 0 C 1 D 10,200 +20,400 E 20,200 +35,350 Assume that the projects are mutually exclusive
Consider the following projects:
| Cash Flows, $ | ||
| Project | C0 | C1 |
| D | 10,200 | +20,400 |
| E | 20,200 | +35,350 |
| 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? | ||||
|
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