You are asked to evaluate the following two projects for Boring Corporation. Use a discount rate of 10 percent. Use Appendix B.

Project X (DVDs of the Weather Reports) ($58,000 Investment)						Project Y (Slow-Motion Replays of Commercials) ($78,000 Investment)

YEAR CASH FLOW YEAR CASHFLOW

1 29,000 1 39,000

2 27,000 2 32,000

3 18,000 3 33,000

4 21,6000 4 35,000

a.	Calculate the PI for project X. (Round "PV Factor" to 3 decimal places. Round the final answer to 2 decimal places.)

PI

b.	Calculate the profitability index for project Y. (Round "PV Factor" to 3 decimal places. Round the final answer to 2 decimal places.)

Profitability index

c.

Using the NPV method combined with the PI approach, which project would you select? Use a discount rate of 10 percent.

	Project X
	Project Y