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) ($46,000 Investment)						Project Y (Slow-Motion Replays of Commercials) ($80,000 Investment)
Year		Cash Flow				Year		Cash Flow
1		$	30,000			1		$	40,000
2			28,000			2			33,000
3			20,000			3			34,000
4			18,600			4			36,000

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?

	Project X
	Project Y

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