Question: Problem 8-25 Profitability Index versus NPV (LO3) Consider projects A and B with the following cash flows: A -$43 C1 +$27 B 68 +

Problem 8-25 Profitability Index versus NPV (LO3) Consider projects A and B

Problem 8-25 Profitability Index versus NPV (LO3) Consider projects A and B with the following cash flows: A -$43 C1 +$27 B 68 + 37 C2 +$27 + 37 C3 +$27 + 37 a-1. What is the NPV of each project if the discount rate is 10%? (Do not round intermediate calculations. Round your answers to 2 decimal places.) a-2. Which project has the higher NPV? b-1. What is the profitability index of each project? (Do not round intermediate calculations. Round your answers to 2 decimal places.) b-2. Which project has the higher profitability index? c. Which project is most attractive to a firm that can raise an unlimited amount of funds to pay for its investment projects? d. Which project is most attractive to a firm that is limited in the funds it can raise? a-1. NPV of each project if the discount rate is 10% a-2. Which project has the higher NPV? b-1. Profitability index of each project b-2. Which project has the higher profitability index? C. Which project is most attractive to a firm that can raise an unlimited amount of funds to pay for its investment projects? d. Which project is most attractive to a firm that is limited in the funds it can raise? Project A Project B

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