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The following are the cash flows of two projects: Year Project A Project B 0 −$...

The following are the cash flows of two projects:

Year Project A Project B
0 −$ 220 −$ 220
1 100 120
2 100 120
3 100 120
4 100

If the opportunity cost of capital is 10%, what is the profitability index for each project? (Do not round intermediate calculations. Round your answers to 4 decimal places.)

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Answer #1
Cash Inflow Project A Project B PV of Project A PV of Project B
Year 1 100 120 90.90909091 109.0909091
Year 2 100 120 82.6446281 99.17355372
Year 3 100 120 75.13148009 90.15777611
Year 4 100 68.30134554
Total 316.9865446 298.4222389
Cash Outflow 220 220
316.986544634929/220 298.422238918107/220
Profitability Index 1.4408 1.3565
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