Consider the following projects:

	Cash Flows, $
Project	C0	C1
D	11,100	+22,200
E	21,100	+36,925

Assume that the projects are mutually exclusive and that the opportunity cost of capital is 11%.

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

b1.	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?

	Project D
	Project E

rev: 03_05_2014_QC_46007