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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 | $ | 5,100 | $ | 6,700 | ||||
| 1 | 2,600 | 1,500 | ||||||
| 2 | 2,500 | 5,100 | ||||||
| 3 | 1,600 | 4,300 | ||||||
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
Project Alpha
Both projects
Neither project
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