Question: Consider the following projects: Cash Flows ($) Project C0 C1 D 11,600 (C0) 23,200 (C1) E 21,600 (C0) 37,800 (C1) Assume that the projects are

Consider the following projects:

Cash Flows ($)

Project C0 C1

D 11,600 (C0) 23,200 (C1)

E 21,600 (C0) 37,800 (C1)

Assume that the projects are mutually exclusive and that the opportunity cost of capital is 11%.

a. Calculate the profitability index for each project.

b-1. Calculate the profitability-index using the incremental cash flows.

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