USE THE FOLLOWING INFORMATION TO ANSWER QUESTIONS 5 & 6.

You are the CEO of Mustafa Inc. and you need to decide betweentwo separate projects that have been proposed by two very goodfriends of yours. The required rate of return is 10%. You know thefollowing information:

Year Smith Project

0. 0 -12,000

1. 1 3000

2. 2 3500

3. 3 4000

4. 4 4500

5. 5 5000

5. What is the profitability index for the Smith Project?

1. 1.39

2. 1.54

3. .96

4. 1.04

5. 1.23

What is the IRR for the Catrine project?

1. 25.67%

2. 22.52%

3. 18.91%

4. 20.48%

5. 31.67%