You and a coworker are analyzing two proposed capital investments with the following cash flows: Year Project A Project B 0 -$15,000-$38,000 1 10,000 9,500 2 4,500 9,500 3 4,500 9,500 4 1,500 26,600 The cost of capital for both projects is 10 percent. Calculate the profitability index (PI) for each project. (Do not round discount factors. Round intermediate calculations to e.g. 15.25 and final answer to 4 decimal places, e.g. 1.2527.) Pl for Proiect A
You and a coworker are analyzing two proposed capital investments with the following cash flows: Year Project A Project B 0 -$15,000-$38,000 1 10,000 9,500 2 4,500 9,500 3 4,500 9,500 4 1,500 26,600 The cost of capital for both projects is 10 percent. Calculate the profitability index (PI) for each project. (Do not round discount factors. Round intermediate calculations to e.g. 15.25 and final answer to 4 decimal places, e.g. 1.2527.) Pl for Proiect A
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Transcribed Image Text:You and a coworker are analyzing two proposed capital investments with the following cash flows:
Year Project A Project B
0
-$15,000-$38,000
1
10,000
9,500
2
4,500
9,500
3
4,500
9,500
4
1,500
26,600
The cost of capital for both projects is 10 percent.
Calculate the profitability index (PI) for each project. (Do not round discount factors. Round intermediate calculations to
e.g. 15.25 and final answer to 4 decimal places, e.g. 1.2527.)
Pl for Proiect A
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