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You are asked to evaluate the following two projects for the Norton corporation. Use a discount rate of 13 percent. Use Appendix B for
You are asked to evaluate the following two projects for the Norton corporation. Use a discount rate of 13 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) ($44,000 Investment) Cash Flow Project Y (Slow-Motion Replays of Commercials) ($64,000 Investment) Cash Flow Year Year 04 1 $ 22,000 1 2 20,000 2 3 21,000 3 4 20,600 4 $ 32,000 25,000 26,000 28,000 a. Calculate the profitability index for project X. Note: Do not round intermediate calculations and round your answer to 2 decimal places. Profitability index b. Calculate the profitability index for project Y. Note: Do not round intermediate calculations and round your answer to 2 decimal places. Profitability index c. Which project would you select based on the profitability index? O Project X
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