You are asked to evaluate the following two projects for Boring Corporation. Use a discount rate of 11 percent. Use Appendix B.

Project X (DVDs of the Weather Reports) ($40,000 Investment)						Project Y (Slow-Motion Replays of Commercials) ($60,000 Investment)
Year		Cash Flow				Year		Cash Flow
1			$20,000			1			$30,000
2			18,000			2			23,000
3			19,000			3			24,000
4			18,600			4			26,000

a. Calculate the profitability index for project X. (Round "PV Factor" to 3 decimal places. Round the final answer to 2 decimal places.)

PI

b. Calculate the profitability index for project Y. (Round "PV Factor" to 3 decimal places. Round the final answer to 2 decimal places.)

PI

c. Using the NPV method combined with the PI approach, which project would you select? Use a discount rate of 11 percent.

multiple choice

• Project Y

• Project X