Question: Yokam Company is considering two alternative projects Project 1 requires
Yokam Company is considering two alternative projects. Project 1 requires an initial investment of $ 400,000 and has a net present value of cash flows of $1,100,000. Project 2 requires an initial investment of $3,500,000 and has a net present value of cash flows of $2,500,000. Compute the profitability index for each project. Based on the profitability index, which project should the company prefer? Explain.
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