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Yokam Company is considering two alternative projects. Project 1 requires an initial investment of $500,000 and has a present value of cash flows of $1,600,000.

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Yokam Company is considering two alternative projects. Project 1 requires an initial investment of $500,000 and has a present value of cash flows of $1,600,000. Project 2 requires an initial investment of $4 million and has a present value of cash flows of $6 million. 1. Compute the profitability index for each project. Profitability Index 1 Choose Denominator: Choose Numerator: = Profitability Index Profitability index Project 1 Project 2 2. Based on the profitability index, which project should the company prefer? O Project 1 O Project 2

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