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The Sloan Corporation is trying to choose between the following two mutually exclusive design projects: Year Cash Flow (I) Cash Flow (II) 0 $ 74,000

The Sloan Corporation is trying to choose between the following two mutually exclusive design projects:

Year Cash Flow (I) Cash Flow (II)
0 $ 74,000 $ 17,000
1 34,000 9,200
2 34,000 9,200
3 34,000 9,200

a-1

If the required return is 12 percent, what is the profitability index for both projects? (Do not round intermediate calculations. Round your answers to 3 decimal places, e.g., 32.161.)

Profitability Index
Project I
Project II

a-2

If the company applies the profitability index decision rule, which project should the firm accept?

Project I
Project Il

b-1

What is the NPV for both projects? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

NPV
Project I $
Project II $

b-2

If the company applies the NPV decision rule, which project should it take?

Project I
Project II

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