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What is the profitability index for each project

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Question - 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

Required -

a-1. If the required return is 10 percent, what is the profitability index for each project?

a-2. If the company applies the profitability index decision rule, which project should the firm accept?

b-1. What is the NPV for each project?

Reference no: EM133039858

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