Refer to two projects with the following cash flows: Project A -$100 Project B -$100 Year 1 40 50 40 50 40 50 4 40 If the opportunity cost of capital is 11%, what is the profitability index for each project? (Round your answers to 4 decimal places.)

Refer to two projects with the following cash flows: Project A -$100 Project B -$100 Year 1 40 50 40 50 40 50 4 40 If the opportunity cost of capital is 11%, what is the profitability index for each project? (Round your answers to 4 decimal places.)

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 13P

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

50
Refer to two projects with the following cash flows:
Project A
-$100
Year
Project B
-$100
0.
1.
40
2.
40
3.
40
4.
4.
If the opportunity cost of capital is 11%, what is the profitability index for each
project? (Round your answers to 4 decimal places.)
Project A
Project B
Does the profitability index rank the projects A and B correctly?
(Click to select) v
(Click to select)
Yes
ON

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