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What is the profitability index for each project

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Reference no: EM132935210

Cori's Sausage Corporation is trying to choose between the following two mutually exclusive design projects:

Year           Cash Flow (I)           Cash Flow (II)

0          -$ 58,000                      -$ 32,800

1         27,100                       15,600

2          27,100                         15,600

3            27,100                          15,600

Problem a: If the required return is 10 percent, what is the profitability index for each project? (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.)

Problem b: If the company applies the profitability index decision rule, which project should the firm accept

Problem c: What is the NPV for each project? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

Reference no: EM132935210

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