FB Company is considering investing in two construction projects, and he developed the following estimates of the cash flows. His required return is 10% and views these projects as equally risky. Project 1 cash flows -$550,000 $150,000 $200,000 $150,000| $150,000 $100,000 Project 2 cash flows -$700,000 $200,000 $150,000 $250,000 $150,000 $150,000 Year 3 4 5
FB Company is considering investing in two construction projects, and he developed the following estimates of the cash flows. His required return is 10% and views these projects as equally risky. Project 1 cash flows -$550,000 $150,000 $200,000 $150,000| $150,000 $100,000 Project 2 cash flows -$700,000 $200,000 $150,000 $250,000 $150,000 $150,000 Year 3 4 5
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 1PA: Your company is planning to purchase a new log splitter for is lawn and garden business. The new...
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b) Calculate the profitability index (PI) of each project, assess its acceptability, and indicate which project is best using PI.
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