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Muffins co. is considering to modernize its production facilities and it has two proposals under consideration. The expected cash flows associated with these projects is

Muffins co. is considering to modernize its production facilities and it has two proposals under consideration. The expected cash flows associated with these projects is as follows. The discount rate associated with both the projects is 12%.

Calculate profitability index for proposal 1

Years

Proposal 1- $

Proposal 2- $

0

(40,000)

(64000)

1

18000

10000

2

24000

32000

3

32000

19000

4

11000

25000

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