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The treasurer of Amaro Canned Fruits, Incorporated, has projected the cash flows of Projects A, B, and C as follows: Year Project A 0
The treasurer of Amaro Canned Fruits, Incorporated, has projected the cash flows of Projects A, B, and C as follows: Year Project A 0 -$405,000 1 297,000 Project B -$810,000 Project C -$405,000 540,000 324,000 540,000 243,000 2 297,000 Suppose the relevant discount rate is 12 percent per year. a. Compute the profitability index for each of the three projects. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely correct. Project A Project B Project C 1.24 0.08 1.19 b. Compute the NPV for each of the three projects. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely correct. Project A $ 96,945.15 Project B $ 742,397.96 x Project C $ 78,003.83 c. Suppose these three projects are independent. Which project(s) should Amaro accept based on the profitability index rule? Project A Project B Project C Project A, Project B, Project C Project A, Project B Project A, Project C Project B, Project C d. Suppose these three projects are mutually exclusive. Which project(s) should Amaro accept based on the profitability index rule? Project A Project B Project C Project A, Project B, Project C Project A, Project B Project A, Project C Project B, Project C
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