Project Everest has an outflow of cash of $34,000 in years 0 and 1, followed by an inflow of $49,000 in each of years 2 and 3. Project Seabed has a cash outflow of $60,000 in year 0, followed by an inflow of $29,000 in years 1, 2, and 3.

a) If the profitability index decision rule applies and the required return is 7.5%, which project should be selected?

b) If the NPV decision rule applies then which project should be selected?

Question Your Response

a) Profitability Index - Which Project?

b) NPV - Which Project?

Answer rating: 100% (QA)

a Profitability Index Which Project The profitability index is calculated by dividing the present va... View the full answer