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Solve profitability index for both projects

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Reference no: EM132524922

                                      Project A                        Project B

Cost of Capital                     10%                             10%

Initial Investment                $150,000                     $225,000

Cashflow Year 1                   $ 75,000                     $ 75,000

Cashflow Year 2                     $ 90,000                  $ 75,000

Cashflow Year 3                   $ 30,000                      $135,000

Cashflow Year 4                   $ 10,000                      $ 45,000

Solve:

Question a) Payback Period for both Projects.

Question b) Net Present Value for both Projects.

Question c) Profitability Index for both Projects

Question d) Which project should the investor accept?

Reference no: EM132524922

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