You and a coworker are analyzing two proposed capital investments with the following cash flows: Year Project A Project B 0 -$22,000 -$38,000 1 17,000 9,500 2 5,400 9,500 3 5,400 9,500 A 2,000 26,600 The cost of capital for both projects is 10 percent. Calculate the profitability index (PI) for each project. (Do not round discount factors. Round intermediate calculations to 2 decimal plac e.g. 15.25 and final answer to 4 decimal places, e.g. 1.2527.)

You and a coworker are analyzing two proposed capital investments with the following cash flows: Year Project A Project B 0 -$22,000 -$38,000 1 17,000 9,500 2 5,400 9,500 3 5,400 9,500 A 2,000 26,600 The cost of capital for both projects is 10 percent. Calculate the profitability index (PI) for each project. (Do not round discount factors. Round intermediate calculations to 2 decimal plac e.g. 15.25 and final answer to 4 decimal places, e.g. 1.2527.)

College Algebra

7th Edition

ISBN:9781305115545

Author:James Stewart, Lothar Redlin, Saleem Watson

Publisher:James Stewart, Lothar Redlin, Saleem Watson

Chapter8: Sequences And Series

Section8.4: Mathematics Of Finance

Problem 2E

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