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Consider the following projects: Cash Flows ($) Project C0 C1 D –11,200 22,400 E –21,200 37,100...

Consider the following projects:

Cash Flows ($)
Project C0 C1
D –11,200 22,400
E –21,200 37,100

Assume that the projects are mutually exclusive and that the opportunity cost of capital is 12%.

a. Calculate the profitability index for each project. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Project Profitability Index
D
E

b-1. Calculate the profitability-index using the incremental cash flows. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Profitability-index            

b-2. Which project should you choose?

Project D
Project E
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Answer #1

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