Question
The Sloan Corporation is trying to choose between the following two mutually exclusive design projects: Year Cash Flow (I) Cash Flow (II) 0 $ 58,000
| The Sloan Corporation is trying to choose between the following two mutually exclusive design projects: |
| Year | Cash Flow (I) | Cash Flow (II) | |||||
| 0 | $ | 58,000 | $ | 18,600 | |||
| 1 | 25,900 | 10,000 | |||||
| 2 | 25,900 | 10,000 | |||||
| 3 | 25,900 | 10,000 | |||||
| a-1 | If the required return is 10 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.) |
| a-2 | If the company applies the profitability index decision rule, which project should the firm accept? |
multiple choice 1
|
| b-1 | What is the NPV for both projects? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) |
| b-2 | If the company applies the NPV decision rule, which project should it take? |
multiple choice 2
|
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Introduction To Corporate Finance
Authors: Laurence Booth, Sean Cleary
3rd Edition
978-1118300763, 1118300769
