Consider the following projects: Cash Flows (5) Co -10,000 -20,000 Assume that the projects are mutually exclusive and that the opportunity cost of capital is 10%. a. Calculate the profitability index for each project. b-1. Calculate the profitability-index using the incremental cash flows. b-2. Which project should you choose? Project D E G 20,000 35,000

Essentials Of Investments
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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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Consider the following projects:
Cash Flows ($)
Co
Project
D
E
G
20,000
35,000
-10,000
-20,000
Assume that the projects are mutually exclusive and that the opportunity cost of capital is 10%.
a. Calculate the profitability index for each project.
b-1. Calculate the profitability-index using the incremental cash flows.
b-2. Which project should you choose?
Answer is complete but not entirely correct.
Complete this question by entering your answers in the tabs below.
0.59
Req A
Req B1
Req B2
Calculate the profitability-index using the incremental cash flows.
Note: Do not round Intermediate calculations. Round your answer to 2 decimal places.
Profitability-index
Transcribed Image Text:Consider the following projects: Cash Flows ($) Co Project D E G 20,000 35,000 -10,000 -20,000 Assume that the projects are mutually exclusive and that the opportunity cost of capital is 10%. a. Calculate the profitability index for each project. b-1. Calculate the profitability-index using the incremental cash flows. b-2. Which project should you choose? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. 0.59 Req A Req B1 Req B2 Calculate the profitability-index using the incremental cash flows. Note: Do not round Intermediate calculations. Round your answer to 2 decimal places. Profitability-index
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