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Compute the profitability index for each project

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Reference no: EM132953178

Question - Yokam Company is considering two alternative projects. Project 1 requires an initial investment of $510,000 and has a present value of cash flows of $1,950,000.0. Project 2 requires an initial investment of $4,000,000 and has a present value of cash flows of $6,000,000.

Required -

1. Compute the profitability index for each project.

2. Based on the profitability index, which project should the company prefer?

Reference no: EM132953178

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