Question
You are analyzing two proposed capital investments with the following cash flows: Year Project X Project Y 0 - $20,000 - $20,000 1 11,830 6,370
You are analyzing two proposed capital investments with the following cash flows: Year Project X Project Y 0 - $20,000 - $20,000 1 11,830 6,370 2 5,460 6,370 3 5,460 6,370 4 1,820 6,370 The cost of capital for both projects is 10 percent. Calculate the profitability index (PI) for each project. (Do not round discount factors. Round intermediate calculations to 2 decimal places, e.g. 15.25 and final answer to 4 decimal places, e.g. 1.2527.) 1.The PI for project X is? 2. and the PI for project Y is? 3. If you have unlimited funds you should invest in . (X,Y, Neither, or Both)? 4. If they are mutually exclusive you should invest in(X,Y, Neither, or Both)?
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