Problem 8-23 Profitability Index (LO3) Consider the following projects: со -$2,650 Project A C1 +$2,550 C2 +$1,750 B - 2,650 + 1,990 + 1,838 a. Calculate the profitability index for A and B assuming a 21% opportunity cost of capital. (Do not round intermediate calculations. Round your answers to 4 decimal places.) Project Profitability index A B b. According to the profitability index rule, which project(s) should you accept? O Project A O Project B Both ○ Neither

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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Problem 8-23 Profitability Index (LO3)
Consider the following projects:
со
-$2,650
Project
A
C1
+$2,550
C2
+$1,750
B
- 2,650
+ 1,990
+ 1,838
a. Calculate the profitability index for A and B assuming a 21% opportunity cost of capital. (Do not round intermediate calculations.
Round your answers to 4 decimal places.)
Project
Profitability
index
A
B
b. According to the profitability index rule, which project(s) should you accept?
O Project A
O Project B
Both
○ Neither
Transcribed Image Text:Problem 8-23 Profitability Index (LO3) Consider the following projects: со -$2,650 Project A C1 +$2,550 C2 +$1,750 B - 2,650 + 1,990 + 1,838 a. Calculate the profitability index for A and B assuming a 21% opportunity cost of capital. (Do not round intermediate calculations. Round your answers to 4 decimal places.) Project Profitability index A B b. According to the profitability index rule, which project(s) should you accept? O Project A O Project B Both ○ Neither
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