You are asked to evaluate the following two projects for the Norton corporation. Use a discount rate of 11 percent. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. Project X (Videotapes of the Weather Report) ($38,000 Investment) Year Cash Flow 1 $ 19,000 2 17,000 3 18,000 4 17,600 Project Y (Slow-Motion Replays of Commercials) ($58,000 Investment) Year Cash Flow $ 29,000 2 22,000 3 23,000 4 25,000 1 a. Calculate the profitability index for project X. (Do not round intermediate calculations and round your answer to 2 decimal places.) Profitability index b. Calculate the profitability index for project Y. (Do not round intermediate calculations and round your answer to 2 decimal places.) Profitability index c. Which project would you select based on the profitability index? Project X O Project Y Appendix B Present value of $1, PVF PV = FV 1 (1 + i)" Percent Period 1% 3% 4% 5% 6% 8% 9% 11% 12% 1 0.943 0.893 0.990 0.980 0.971 0.943 0.926 0.857 7% 0.935 0.873 0.816 2 0.962 0.925 0.889 0.855 0.890 0.952 0.907 0.864 0.823 0.917 0.842 0.772 0.708 10% 0.909 0.826 0.751 0.683 0.901 0.812 0.731 0.797 0.712 3 0.840 0.915 0.888 0.794 0.735 4 0.792 0.763 0.659 0.636 0.971 0.961 0.951 0.942 5 2% 0.980 0.961 0.942 0.924 0.906 0.888 0.871 0.853 0.837 0.820 0.863 0.784 0.747 0.621 0.593 0.567 0.681 0.630 6 0.507 0.705 0.665 0.535 0.482 7 0.583 0.452 8 0.627 0.540 0.434 0.404 0.933 0.923 0.914 0.905 0.837 0.813 0.789 0.766 0.744 0.722 9 0.500 0.822 0.790 0.760 0.731 0.703 0.676 0.650 0.625 0.601 0.577 0.746 0.711 0.677 0.645 0.614 0.585 0.557 0.530 0.505 0.481 10 0.713 0.666 0.623 0.582 0.544 0.508 0.475 0.444 0.415 0.388 0.592 0.558 0.527 0.463 0.429 0.564 0.513 0.467 0.424 0.386 0.350 0.319 0.290 0.263 0.361 0.322 0.287 11 0.650 0.596 0.547 0.502 0.460 0.422 0.388 0.356 0.326 0.299 0.275 0.252 0.231 0.896 0.804 0.391 0.352 0.317 0.286 0.258 0.232 12 0.788 0.397 0.257 13 0.368 0.340 0.773 0.758 0.743 0.229 0.205 14 0.887 0.879 0.870 0.861 0.853 0.844 15 0.555 0.362 0.315 0.239 0.209 0.183 0.163 16 0.728 0.458 0.339 0.188 17 0.701 0.681 0.661 0.642 0.623 0.605 0.587 0.570 0.554 0.478 0.412 0.170 0.146 0.714 0.700 0.686 0.436 0.416 0.292 0.270 0.250 0.317 0.296 18 0.836 0.497 0.469 0.442 0.417 0.394 0.371 0.350 0.331 0.312 0.233 0.174 0.097 0.054 0.212 0.153 0.534 0.513 0.494 0.475 0.456 0.375 0.130 19 0.828 0.396 0.116 0.232 0.215 0.218 0.198 0.180 0.164 0.149 0.092 0.057 20 0.277 0.258 0.184 0.820 0.780 0.104 0.673 0.610 0.194 0.178 0.116 0.075 0.377 0.295 0.231 0.138 0.124 0.074 0.044 25 0.146 0.059 30 0.742 0.552 0.131 0.099 0.308 0.208 40 0.672 0.453 0.307 0.142 0.067 0.046 0.032 0.022 0.015 0.005 0.033 0.011 0.003 50 0.608 0.372 0.228 0.141 0.087 0.034 0.021 0.013 0.009 Appendix B (concluded) Present value of $1 Percent Period 13% 14% 15% 16% 17% 18% 19% 20% 25% 30% 35% 40% 50% 1 0.885 0.877 0.862 0.840 0.833 0.800 0.741 0.714 0.667 0.847 0.718 2 0.783 0.743 0.694 0.640 0.769 0.675 0.444 0.855 0.731 0.624 0.534 0.870 0.756 0.658 0.572 0.497 0.769 0.592 0.455 0.706 0.593 3 0.579 0.512 0.693 0.613 0.543 0.641 0.552 0.609 0.515 0.549 0.406 0.301 0.510 0.364 0.260 0.296 0.198 4 0.592 0.499 0.482 0.350 0.269 5 0.519 0.476 0.456 0.419 0.402 0.223 0.186 0.410 0.328 0.262 0.210 6 0.480 0.425 0.456 0.400 0.432 0.376 0.327 0.437 0.370 0.314 0.266 0.410 0.354 0.305 0.390 0.333 0.352 0.296 0.335 0.279 0.233 0.207 0.159 7 0.165 0.122 0.132 0.088 0.059 0.133 0.095 0.068 8 0.376 0.351 0.285 0.249 0.168 0.123 .091 0.039 9 0.333 0.209 0.308 0.270 0.284 0.247 0.263 0.227 0.243 0.208 0.225 0.191 0.134 0.107 0.094 0.073 0.067 .050 .048 0.035 0.026 0.017 10 0.295 0.176 0.194 0.162 0.135 0.1 12 11 0.012 0.261 0.231 0.237 0.208 0.215 0.187 0.163 0.195 0.168 0.162 0.137 0.148 . 124 .086 0.069 0.056 0.043 0.037 0.027 0.025 0.018 12 0.008 0.178 . 152 0.130 0.111 13 0.204 0.182 0.145 0.1 16 0.093 0.055 0.033 .020 0.005 0.104 .088 14 0.160 0.141 0.125 0.099 0.078 0.044 0.025 0.003 0.181 0.160 15 0.108 0.065 0.020 0.002 0.140 0.123 0.108 0.095 .081 16 0.123 0.107 0.093 0.141 0.015 0.011 0.008 .084 .071 0.060 .093 0.054 0.035 0.028 0.023 0.002 0.015 0.012 .013 0.009 .006 0.005 .003 0.002 0.002 0.001 17 0.074 .062 .052 0.044 .037 0.125 0.080 0.045 0.006 0.069 0.059 .001 18 0.095 0.081 0.069 .051 0.038 0.018 .001 0.009 0.007 19 0.083 0.060 0.051 0.043 .031 0.014 0.111 0.098 .087 0.047 0.026 0.008 0.005 .003 .002 0.001 20 25 30 0.073 0.038 0.020 0.005 0.070 0.061 0.030 0.015 0.004 0.001 0.051 .024 0.012 0.003 .043 0.020 0.009 0.002 0.037 .016 0.007 0.001 .031 .013 0.005 0.001 0.026 0.010 0.004 .012 0.004 0.001 0.005 0.001 40 0.001 50 0.002 0.001 0.001