You are asked to evaluate the following two projects for the Norton corporation. Use a discount rate of 12 percent. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods.

Project X (Videotapes of the Weather Report) ($36,000 Investment)		Project Y (Slow-Motion Replays of Commercials) ($56,000 Investment)
Year	Cash Flow		Year	Cash Flow
1	$	18,000			1	$	28,000
2		16,000			2		21,000
3		17,000			3		22,000
4		16,600			4		24,000

a. Calculate the profitability index for project X. (Do not round intermediate calculations and round your answer to 2 decimal places.)

b. Calculate the profitability index for project Y. (Do not round intermediate calculations and round your answer to 2 decimal places.)

c. Which project would you select based on the profitability index?

Project X

Project Y