PROBLEM 1

PROBLEM 2

Based on the profitability index rule, should a project with the following cash flows be accepted if the discount rate is 14 percent? Why or why not? Year Cash Flow 0 $32,100 1 $11,800 2 $0 3 $22,600 Yes, The Pl is 0.96. O Yes; The Plis 0.80. O Yes, The Pl is 1.08. O No; The Plis 0.96. O No; The Plis 0.80. A firm evaluates all of its projects by applying the IRR rule. The required return for the following project is 21 percent. The IRR is project. percent and the firm should the Year Cash flow 0 - $28.643 1 $17,000 2 $15,400 3 $4,000 16.05 percent; reject O 16.05 percent; accept 0 24.26 percent; reject O 26.30 percent; accept O 26.30 percent; reject