Question
Consider the following projects: Cash Flows ($) Project C0 C1 D 10,500 21,000 E 20,500 35,875 Assume that the projects are mutually exclusive and that
Consider the following projects:
Cash Flows ($)
Project C0 C1 D 10,500 21,000 E 20,500 35,875
Assume that the projects are mutually exclusive and that the opportunity cost of capital is 10%.
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? Project D Project E
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