Question
Jefferson International is trying to choose between the following two mutually exclusive design projects: The required return is 13 percent. If the company applies the
Jefferson International is trying to choose between the following two mutually exclusive design projects: The required return is 13 percent. If the company applies the profitability index (PI) decision rule, which project should the firm accept? If the company applies the NPV decision rule, which project should it take? Given your first two answers, which project should the firm actually accept?
| Year | Cash flows (A) | Cash flows (B) |
| 0 | -$ 55,000 | -$ 29,000 |
| 1 | $ 12,300 | $ 19.400 |
| 2 | $ 15,100 | $16,600 |
| 3 | $50,000 | $ 900 |
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Essentials Of Corporate Finance
Authors: Stephen A. Ross, Randolph Westerfield, Bradford D. Jordan
6th Edition
978-0073405131, 9780073405131
