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You are asked to evaluate the following two projects for the Norton corporation. Use a discount rate of 14 percent. Use Appendix B for an
You are asked to evaluate the following two projects for the Norton corporation. Use a discount rate of 14 percent. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. Project X (Videotapes Project Y (Slow-Motion of the Weather Report) ($20,000 Replays of Commercials) ($40,000 Investment) Year Cash Flow 1 2 3 4 $ 10,000 8,000 9,000 8,600 Cash Flow $ 20,000 13,000 14,000 16,000 a. Calculate the profitability index for project X. Note: Do not round intermediate calculations and round your answer to 2 decimal places. Profitability index Investment) Profitability index Year 1 2 3 4 6088.20 Saved b. Calculate the profitability index for project Y. Note: 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
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