Question: 1) Calculating PI & NPV The Multigig Computer Corporation is trying to choose between the following two mutually exclusive design projects: Year Cash Flow (1)

1) Calculating PI & NPV The Multigig Computer Corporation is trying to choose between the following two mutually exclusive design projects:

Year Cash Flow (1) Cash Flow (2)

0 -15 000 - 2 000

1 8 500 2 500

2 8 500 2 500

3 8 500 2 500

(a) If the required rate is 9% and Multigig Computer applies the profitability index decision rule, which project should the firm accept?

(b) If the company applies NPV decision rule, which project should it take?

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