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E) What is the profitability index for the following set of cash flows? If the relevant discount rate is 10%? What if the discount rate
E) What is the profitability index for the following set of cash flows? If the relevant discount rate is 10%? What if the discount rate is 15%? If it is 22%? Year 0 1 Cash Flow -29,000 16,900 13,600 8,300 2 3 F) The Windwards Corporation is trying to choose between the following two mutually exclusive projects: Year 1 CF(0) -84,000 30,600 36,900 43,700 CF(11) -29,800 10,500 17,400 15,600 F1) If the required rate return is 11% and the company applies the profitability index decision rule, which projects should the firm except? F2) If the company applies the. NPV decision rule, which project should it take? F3) Explain why your answer in part A and Part B might be different
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