The Whenworth Corporation is trying to choose between the following two mutually exclusive design projects: Cash Flow (I) Cash Flow (II) -$84,000 33,900 44,000 50,000 Year -$42,000 12,600 31,500 25,500 1 2 a-1. If the required return is 17 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 it take? b-1. If the required return is 17 percent, what is the NPV for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b-2. If the company applies the net present value decision rule, which project should it take? a-1. ProjectI Project II а-2. b-1. Project I Project II

The Whenworth Corporation is trying to choose between the following two mutually exclusive design projects: Cash Flow (I) Cash Flow (II) -$84,000 33,900 44,000 50,000 Year -$42,000 12,600 31,500 25,500 1 2 a-1. If the required return is 17 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 it take? b-1. If the required return is 17 percent, what is the NPV for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b-2. If the company applies the net present value decision rule, which project should it take? a-1. ProjectI Project II а-2. b-1. Project I Project II

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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