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Problem 1 2 - 2 5 You are asked to evaluate the following two projects for Boring Corporation. Use a discount rate of 1 2

Problem 12-25
You are asked to evaluate the following two projects for Boring Corporation. Use a discount rate of 12 percent. Use Appendix B.
Project X (DVDs
of the Weather Reports)
($50,000 Investment)
Project Y (Slow-Motion
Replays of Commercials)
($70,000 Investment)
Year Cash Flow Year Cash Flow
1 $25,0001 $35,000
223,000228,000
324,000329,000
423,600431,000
a. Calculate the profitability index for project X.(Round "PV Factor" to 3 decimal places. Round the final answer to 2 decimal places.)
PI
b. Calculate the profitability index for project Y.(Round "PV Factor" to 3 decimal places. Round the final answer to 2 decimal places.)
PI
c. Using the NPV method combined with the PI approach, which project would you select? Use a discount rate of 12 percent.
multiple choice
Project Y
Project X

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