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The following are the cash flows of two projects: Year Project A Project B 0 $230 $230 1 110 130 2 110 130 3 110
| The following are the cash flows of two projects:
|
| Year | Project A | Project B |
| 0 | $230 | $230 |
| 1 | 110 | 130 |
| 2 | 110 | 130 |
| 3 | 110 | 130 |
| 4 | 110 | |
| a. | If the opportunity cost of capital is 11%, 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 | |
| b. | Does the profitability index rank the projects correctly? | ||||
|
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Theoretical Foundations For Quantitative Finance
Authors: Luca Spadafora, Gennady P Berman
1st Edition
9813202475, 978-9813202474
