Profitability

index.

Given the discount rate and the future cash flow of each project listed in the following table,

, use the PI to determine which projects the company should accept.

Cash Flow	Project U		Project V
Year 0	$2,200,000		$2,400,000
Year 1	$550,000		$1,200,000
Year 2	$550,000		$950,000
Year 3	$550,000		$700,000
Year 4	$550,000		$450,000
Year 5	$550,000		$200,000
Discount rate	9%		10%