123 You are asked to evaluate the following two projects for the Norton corporation. Use a discount rate of 13 percent. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. Project X (Videotapes of the Weather Report) ($18,000 Investment) Cash Flow Year Project Y (Slow-Motion Replays of Commercials) ($38,000 Investment) Cash Flow Year $ 9,000 1 7,000 8,000 2 3 7,600 4 $19,000 12,000 13,000 15,000 4 a. Calculate the profitability index for project X. Note: Do not round intermediate calculations and round your answer to 2 decimal places. Profitability index b. Calculate the profitability index for project Y. Note: Do not round intermediate calculations and round your answer to 2 decimal places. Profitability index

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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123
You are asked to evaluate the following two projects for the Norton corporation. Use a discount rate of 13 percent. Use Appendix B for
an approximate answer but calculate your final answer using the formula and financial calculator methods.
Project X (Videotapes of
the Weather Report)
($18,000 Investment)
Cash Flow
Year
Project Y (Slow-Motion
Replays of Commercials)
($38,000 Investment)
Cash Flow
Year
$ 9,000
1
7,000
8,000
2
3
7,600
4
$19,000
12,000
13,000
15,000
4
a. Calculate the profitability index for project X.
Note: Do not round intermediate calculations and round your answer to 2 decimal places.
Profitability index
b. Calculate the profitability index for project Y.
Note: Do not round intermediate calculations and round your answer to 2 decimal places.
Profitability index
Transcribed Image Text:123 You are asked to evaluate the following two projects for the Norton corporation. Use a discount rate of 13 percent. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. Project X (Videotapes of the Weather Report) ($18,000 Investment) Cash Flow Year Project Y (Slow-Motion Replays of Commercials) ($38,000 Investment) Cash Flow Year $ 9,000 1 7,000 8,000 2 3 7,600 4 $19,000 12,000 13,000 15,000 4 a. Calculate the profitability index for project X. Note: Do not round intermediate calculations and round your answer to 2 decimal places. Profitability index b. Calculate the profitability index for project Y. Note: Do not round intermediate calculations and round your answer to 2 decimal places. Profitability index
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