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You are analyzing two proposed capital investments with the following cash flows: Year Project X Project Y 0 - $20,000 - $20,000 1 12,730
You are analyzing two proposed capital investments with the following cash flows: Year Project X Project Y 0 - $20,000 - $20,000 1 12,730 6,670 2 5,660 6,670 3 6,260 6,670 4 1,820 6,670 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.) The PI for project X is and the PI for project Y is Which project, or projects, should be accepted if you have unlimited funds to invest?
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