Consider the following projects: Cash Flows ($) Co -11,900 -21,900 Assume that the projects are mutually...
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Consider the following projects: Cash Flows ($) Co -11,900 -21,900 Assume that the projects are mutually exclusive and that the opportunity cost of capital is 8%. a. Calculate the profitability index for each project. b-1. Calculate the profitability-index using the incremental cash flows. b-2. Which project should you choose? Project D G₁₂ 23,800 38,325 Consider the following projects: Cash Flows ($) Co -11,900 -21,900 Assume that the projects are mutually exclusive and that the opportunity cost of capital is 8%. a. Calculate the profitability index for each project. b-1. Calculate the profitability-index using the incremental cash flows. b-2. Which project should you choose? Project D G₁₂ 23,800 38,325
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Answer rating: 100% (QA)
To calculate the profitability index we need to divide the present value of the cash flows by the initial investment for each project The present valu... View the full answer
Related Book For
Intermediate Financial Management
ISBN: 978-1111530266
11th edition
Authors: Eugene F. Brigham, Phillip R. Daves
Posted Date:
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