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Consider the following projects: Cash Flows ($) Project C 0 C 1 D 10,700 21,400 E 20,700 36,225 Assume that the projects are mutually exclusive
Consider the following projects:
Cash Flows ($) | ||
Project | C0 | C1 |
D | 10,700 | 21,400 |
E | 20,700 | 36,225 |
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.)
b. Calculate the profitability-index using the incremental cash flows. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
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