Question
Suppose the following two independent investment opportunities are available to Greene, Inc. The appropriate discount rate is 11 percent. Year Project Alpha Project Beta 0)
Suppose the following two independent investment opportunities are available to Greene, Inc. The appropriate discount rate is 11 percent.
Year Project Alpha Project Beta
0) $ 4,100 $ 5,700
1) 2,100 1,250
2) 2,000 4,100
3) 1,350 3,800
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
Which project(s) should the company accept based on the profitability index rule?
Project Beta
Neither project
Project Alpha
Both projects
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