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Find and calculate profitability index for both projects

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Reference no: EM132525863

                                    Project A                                 Project B

Cost of Capital                       10%                               10%

Initial Investment                    $150,000                       $225,000

Cashflow Year 1                          $ 75,000                    $ 75,000

Cashflow Year 2                           $ 90,000                  $ 75,000

Cashflow Year 3                             $ 30,000                   $135,000

Cashflow Year 4                            $ 10,000                     $ 45,000

Calculate:

Question a) Payback Period for both Projects.

Question b) Net Present Value for both Projects.

Question c) Profitability Index for both Projects

Question d) Which project should the investor accept?

Reference no: EM132525863

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