What is the profitability index for each project

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Reference no: EM13859230

The Matterhorn Corporation is trying to choose between the following two mutually exclusive design projects: Year Cash Flow (I) Cash Flow (II) 0 $91,000 $59,000 1 40,900 12,500 2 51,000 38,500 3 31,000 32,500

Requirement 1:

(a) If the required return is 14 %, what is the profitability index for each project? (Do not round intermediate calculations. Round your answers to 3 decimal places (e.g., 32.161).) Profitability index Project I Project II

(b) If the required return is 14 % and the company applies the profitability index decision rule, which project should the firm accept? (Click to select)Project II Project I

Requirement 2:

(a) If the required return is 14 %, what is the NPV for each project? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).) Net present value Project I $ Project II $

Reference no: EM13859230

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