Question
Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 $218,917 $16,419 1 25,700 5,985 2 53,000 8,370 3 58,000
Consider the following two mutually exclusive projects:
| Year | Cash Flow (A) | Cash Flow (B) |
| 0 | $218,917 | $16,419 |
| 1 | 25,700 | 5,985 |
| 2 | 53,000 | 8,370 |
| 3 | 58,000 | 13,931 |
| 4 | 420,000 | 8,655 |
Whichever project you choose, if any, you require a 6 percent return on your investment.
1. What is the profitability index for Project A?
2. What is the profitability index for Project B?
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Challenging Global Finance
Authors: Elizabeth Friesen
2012th Edition
0230348793, 978-0230348790
