Problem 5-8 Calculating Profitability Index

Suppose the following two independent investment opportunities are available to Greenplain, Inc. The appropriate discount rate is 15 percent.

Year	Project Alpha		Project Beta
0	$	-1,520	$	-2,640
1		830		580
2		910		1,870
3		810		2,130

Requirement1: Compute the profitability index for each of the two projects. (Round your answers to 3 decimal places. (e.g., 32.161))

Profitability index

Project Alpha Project Beta

Requirement2: Which project(s) should Greenplain accept based on the profitability index rule?

Project Alpha or Project Beta