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suppose the following two independent investment opportunities are available to a company. The appropriate discount rate is 8.5 percent. Year Project Alpha Project Beta 0

suppose the following two independent investment opportunities are available to a company. The appropriate discount rate is 8.5 percent.

Year Project Alpha Project Beta

0 -$3,700 -$4,300

1 1,900 1,500

2 1,800 3,100

3 1,400 2,400

a) compute the profitability index for each of the two projects.

b) Which project(s) should the company accept based on the profitibility index rule?

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