If the required return is 10 percent, what is the profitability index for both projects? (Do not round intermediate calculations. 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 I Project Il b-1 What is the NPV for both projects? (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 I Project II
If the required return is 10 percent, what is the profitability index for both projects? (Do not round intermediate calculations. 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 I Project Il b-1 What is the NPV for both projects? (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 I Project II
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
|
The Sloan Corporation is trying to choose between the following two mutually exclusive design projects: |
| Year | Cash Flow (I) |
Cash Flow (II) |
|||||
| 0 | –$ | 55,000 | –$ | 18,900 | |||
| 1 | 25,000 | 10,150 | |||||
| 2 | 25,000 | 10,150 | |||||
| 3 | 25,000 | 10,150 | |||||
| a-1 |
If the required return is 10 percent, what is the profitability index for both projects? (Do not round intermediate calculations. 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? |
|
| b-1 |
What is the |
| b-2 |
If the company applies the NPV decision rule, which project should it take? |
|
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