Consider the following projects Cash Flows, $ Project C 0 C 1 D 10,200 20,400 E 20,200 35,350 Assume that the projects are mutually exclusive and that the opportunity cost of capital is 12 a Calculate the profitability index for each project (Do not round intermediate calculations Round your answers to 2 decimal places ) Project Profitability Index D E b 1 Calculate the profitability index using the incremental cash flows (Do not round intermediate calculations Round your answer to 2 decimal places ) Profitability index b 2 Which project should you choose Project D Project E

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Question: Consider the following projects: Cash Flows, $ Project C 0 C 1 D 10,200 +20,400 E 20,200 +35,350 Assume that the projects are mutually exclusive

Consider the following projects:

	Cash Flows, $
Project	C₀	C₁
D	10,200	+20,400
E	20,200	+35,350

Assume that the projects are mutually exclusive and that the opportunity cost of capital is 12%.

a.	Calculate the profitability index for each project. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Project	Profitability Index
D
E

b-1.

Calculate the profitability-index using the incremental cash flows? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Profitability-index

b-2.

Which project should you choose?

	Project D
	Project E

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