Question
You are analyzing two proposed capital investments with the following cash flows: Year Project X Project Y 0 - $20,000 - $20,000 1 13,030 7,270
You are analyzing two proposed capital investments with the following cash flows: Year Project X Project Y 0 - $20,000 - $20,000 1 13,030 7,270 2 6,360 7,270 3 5,860 7,270 4 2,020 7,270 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 enter the profitability index for project X rounded to 4 decimal places and the PI for project Y is enter the profitability index for project Y rounded to 4 decimal places . Which project, or projects, should be accepted if you have unlimited funds to invest? If you have unlimited funds you should invest in select a project . Which project should be accepted if they are mutually exclusive? If they are mutually exclusive you should invest in select a project
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