Question
Refer to two projects with the following cash flows: Year Project A Project B 0 -$110 -$110 1 45 55 2 45 55 3 45
Refer to two projects with the following cash flows:
| Year | Project A | Project B |
| 0 | -$110 | -$110 |
| 1 | 45 | 55 |
| 2 | 45 | 55 |
| 3 | 45 | 55 |
| 4 | 45 | |
If the opportunity cost of capital is 13%, what is the profitability index for each project? (Round your answers to 4 decimal places.)
| Project A | |
| Project B |
Does the profitability index rank the projects A and B correctly?
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Financial Markets And Corporate Strategy
Authors: David Hillier , Mark Grinblatt , Sheridan Titman
2nd Edition
0077129423,0077141350
