Question: Evaluate the following projects, using the profitability index. Assume a cost of capital of 12%. Project T Projects -$390,000 -$750,000 34,500 480,000 Initial Cash Outflow

Evaluate the following projects, using the profitability index. Assume a cost

Evaluate the following projects, using the profitability index. Assume a cost of capital of 12%. Project T Projects -$390,000 -$750,000 34,500 480,000 Initial Cash Outflow Year 1 Cash flow Year 2 Cash flow Year 3 Cash flow 190,500 285,000 285,000 225,000 Required: a. What is the profitability index for each project? (3 marks) b. if the projects are independent, which would you accept according to the profitability index criterion? (1 mark) If these projects are mutually exclusive, which would you accept according to the PI criterion? (1 mark) C

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