The following are the cash flows of two projects: Year Project A Project B 0 $ (390) $ (390) 1 220 290 2 220 290 3 220 290 4 220 If the opportunity cost of capital is 12%, what is the profitability index for each project?

The following are the cash flows of two projects: Year Project A Project B 0 $ (390) $ (390) 1 220 290 2 220 290 3 220 290 4 220 If the opportunity cost of capital is 12%, what is the profitability index for each project?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 13P

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Question

The following are the cash flows of two projects:

Year	Project A	Project B
0	$ (390)	$ (390)
1	220	290
2	220	290
3	220	290
4	220

If the opportunity cost of capital is 12%, what is the profitability index for each project?

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