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The following are the cash flows of two projects: Year Project A Project B 0 $ 330 $ 330 1 160 230 2 160 230
| The following are the cash flows of two projects: |
| Year | Project A | Project B | |||||||||
| 0 | $ | 330 | $ | 330 | |||||||
| 1 | 160 | 230 | |||||||||
| 2 | 160 | 230 | |||||||||
| 3 | 160 | 230 | |||||||||
| 4 | 160 | ||||||||||
| If the opportunity cost of capital is 12%, what is the profitability index for each project? (Do not round intermediate calculations. Round your answers to 4 decimal places.) |
| Project | Profitability index |
| A? | |
| B? | |
| Is the project with the highest profitability index also the one with the highest NPV? | ||
|
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Cases in Finance
Authors: Jim DeMello
3rd edition
1259330476, 1259330478, 9781259352652 , 978-1259330476
