What is the profitability index for each project

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Reference no: EM13951912

The Matterhorn Corporation is trying to choose between the following two mutually exclusive design projects: Year Cash Flow (I) Cash Flow (II) 0 –$87,000 –$55,000 1 36,900 11,700 2 47,000 34,500 3 27,000 28,500 Requirement 1: (a) If the required return is 10 percent, 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 10 percent and the company applies the profitability index decision rule, which project should the firm accept? Requirement 2: (a) If the required return is 10 percent, 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 $ (b) If the company applies the NPV decision rule, which project should it take?

Reference no: EM13951912

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