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The Seattle Sweatshirt Company is considering two different capital investment projects. The first is an industrial vinyl cutting machine that has a cost of $42,000.
The Seattle Sweatshirt Company is considering two different capital investment projects. The first is an industrial vinyl cutting machine that has a cost of $42,000. The second investment opportunity is an embroidery machine that has a cost of $80,000. After performing some calculations, Seattle determined the total present value of the cash inflow for the vinyl cutter is $48,000 and the total present value of the cash inflow of the embroidery machine is $92,000. Seattle has the money to fund only one of these products. Seattle uses the profitability index to make its decisions. Which of the options should Seattle pursue, and why? a.) Seattle should invest in the vinyl cutter. The vinyl cutter has a profitability index of .15, whereas the embroidery machine has a slightly lower profitability index of .143 b.) Seattle should invest in the embroidery machine. The embroidery machine has a profitability index of .87, whereas the vinyl cutter has a slightly lower profitability index of .875 c.) Seattle should invest in the vinyl cutter. The vinyl cutter has a profitability index of 1.38, whereas the embroidery machine has a slightly lower profitability index of 1.27. d.) Seattle should invest in the embroidery machine. The embroidery
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