Question: Consider the following projects: Cash Flows ($) Project C 0 C 1 D 11,200 22,400 E 21,200 37,100 Assume that the projects are mutually exclusive

Consider the following projects:

Cash Flows ($)
Project	C₀	C₁
D	–11,200	22,400
E	–21,200	37,100

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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