Year, Cash flow 1, Cash flow 2

0 , -55,000, -18,900

1 , 25,000, 10,150

2 ,25,000 ,10,150

3, 25,000, 10,150

a-1 if the required return for both projects is 10% what is the profitability index for both projects

a-2 if the company applies the profitability index decision rule which project should the firm, accept.

b-1 what is the NPV for both

b-2 if the company applies the NPV decision rule which projects should it choose