What is the profitability index for project

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

Year CashFlow1 Cash Flow2

0 -65,000 -39,800

1 29,200 18,000

2 29,200 18,000

3 29,200 18,000

a-1. If the required return is 12 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.)

a-2. If the company applies the profitability index decision rule, which project should the firm accept? (project 1 or project 2)

b-1. 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.)

b-2. If the company applies the NPV decision rule, which project should it take? (project 1 or project 2)

Reference no: EM133070483

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