Calculate the profitability index for project

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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 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.)

b. Calculate the profitability index for project Y.

Reference no: EM131931804

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