Reference no: EM131310894
The Sloan Corporation is trying to choose between the following two mutually exclusive design projects: Year Cash Flow (I) Cash Flow (II) 0 –$ 61,000 –$ 18,300 1 28,100 9,950 2 28,100 9,950 3 28,100 9,950
a-1 If the required return is 10 percent, what is the profitability index for both projects? (Do not round intermediate calculations. Round your answers to 3 decimal places, e.g., 32.161.)
Profitability Index
Project I
Project II
a-2 If the company applies the profitability index decision rule, which project should the firm accept?
Project I
Project Il
b-1 What is the NPV for both projects? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
NPV
Project I $
Project II $
b-2 If the company applies the NPV decision rule, which project should it take?
Project I
Project II
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