You are asked to evaluate the following two projects for the Norton corporation. Use a discount rate of 14 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) ($20,000 Investment)		Project Y (Slow-Motion Replays of Commercials) ($40,000 Investment)
Year	Cash Flow	Year	Cash Flow
1	$ 10,000	1	$ 20,000
2	8,000	2	13,000
3	9,000	3	14,000
4	8,600	4	16,000

1. Calculate the profitability index for project X.

   Note: Do not round intermediate calculations and round your answer to 2 decimal places.

2. Calculate the profitability index for project Y.

   Note: Do not round intermediate calculations and round your answer to 2 decimal places.

3. Which project would you select based on the profitability index?
   multiple choice

   • Project X

   • Project Y