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Please answer all the question. Suppose the following two independent investment opportunities are available to Relax, Inc. The appropriate discount rate is 12 percent. Year
Please answer all the question.
| Suppose the following two independent investment opportunities are available to Relax, Inc. The appropriate discount rate is 12 percent. |
| Year | Project Alpha | Project Beta |
| 0 | $3,300 | $4,900 |
| 1 | 1,700 | 1,050 |
| 2 | 1,600 | 3,300 |
| 3 | 1,150 | 3,400 |
| a. | Compute the profitability index for each of the two projects. (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.) |
| Profitability Index | |
| Project Alpha | |
| Project Beta | |
| b. | Which project should the company accept based on the profitability index rule? | ||||
|
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