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You are asked to evaluate the following two projects for the Norton corporation. Use a discount rate of 10 percent. Use Appendix B for an
You are asked to evaluate the following two projects for the Norton corporation. Use a discount rate of 10 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) ($34,000 Investment) Year Cash Flow 1 $ 17,000 2 15,000 3 16,000 4 15,600 Project Y (Slow-Motion Replays of Commercials) ($54,000 Investment) Year Cash Flow 1 $ 27,000 2 20,000 3 21,000 4 23,000 a. Calculate the profitability index for project X. (Do not round intermediate calculations and round your answer to 2 decimal places.) Profitability index b. Calculate the profitability index for project Y. (Do not round intermediate calculations and round your answer to 2 decimal places.) Profitability index c. Which project would you select? O Project X O Project Y
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