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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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