Question: c9 q-11 need help with the last 2 steps 3& 4 Profitability index. Given the discount rate and the future cash flow of each project
c9 q-11 need help with the last 2 steps 3& 4
Profitability index. Given the discount rate and the future cash flow of each project listed in the following table, use the PI to determine which projects the company should accept.
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| Cash Flow | Project A | Project B | ||
| Year 0 | $1,900,000 | $2,700,000 | ||
| Year 1 | $350,000 | $1,350,000 | ||
| Year 2 | $500,000 | $1,200,000 | ||
| Year 3 | $650,000 | $1,050,000 | ||
| Year 4 | $800,000 | $900,000 | ||
| Year 5 | $950,000 | $750,000 | ||
| Discount rate | 7% | 13% | ||
What is the PI of project A?
1.35901.3590
(Round to two decimal places.)
Part 2
Project A should be
accepted
Part 3
What is the PI of project B?
(Round to two decimal places.)
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