18)

You are asked to evaluate the following two projects for the Norton corporation. Use a discount rate of 12 percent. UseAppendix Bfor an approximate answer but calculate your final answer using the formula and financial calculator methods.

Project X (Videotapes of the Weather Report) ($16,000 Investment)		Project Y (Slow-Motion Replays of Commercials) ($36,000 Investment)
Year	Cash Flow		Year	Cash Flow
1	$	8,000			1	$	18,000
2		6,000			2		11,000
3		7,000			3		12,000
4		6,600			4		14,000

a.	Calculate the profitability index for project X.(Do not round intermediate calculations and round your answer to 2 decimal places.)

Profitability index

b.	Calculate the profitability index for project Y.(Do not round intermediate calculations and round your answer to 2 decimal places.)

Profitability index

c.	Which project would you select?
	Project X Project Y