The following are the cash flows of two projects: Year Project A Project B 0 $33

Question

The following are the cash flows of two projects: Year Project A Project B 0 $330        $330        1 160        230        2 160        230        3 160        230        4 160        a. If the opportunity cost of capital is 12%, what is the profitability index for each project? (Do not round intermediate calculations. Round your answers to 4 decimal places.)   Project Profitability Index    A       B       b. Does the profitability index rank the projects correctly? Yes No The following are the cash flows of two projects:

Explanation / Answer

a) profitability index of A B

1.4726 1.6740

b) Yes profitability index rank the projects correctly

Profitability Index = Present Value of Future Cash Flows Initial Investment Required

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.