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Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 $ 354,000 $ 48,000 1 41,000 23,600 2 61,000 21,600
Consider the following two mutually exclusive projects: |
Year | Cash Flow (A) | Cash Flow (B) | |||||
0 | $ | 354,000 | $ | 48,000 | |||
1 | 41,000 | 23,600 | |||||
2 | 61,000 | 21,600 | |||||
3 | 61,000 | 19,100 | |||||
4 | 436,000 | 14,200 | |||||
Whichever project you choose, if any, you require a return of 14 percent on your investment.
What is the profitability index for each project? (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.) |
Project A ?
Project B?
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