The Michner Corporation is trying to choose between the following two mutually exclusive design projects: Year Cash Flow (1) Cash Flow (II) $- -$ 0 71,000 17,300 1 33,000 9,350 2 33,000 9,350 3 33,000 9,350 a-1.If the required return is 12 percent, what is the profitability index for both projects? (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.) Project I Project II a- If the company applies the profitability index decision rule, which project should the 2. firm accept? O Project I ○ Project II b- What is the NPV for both projects? (A negative answer should be indicated by a 1. minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

The Michner Corporation is trying to choose between the following two mutually exclusive design projects: Year Cash Flow (1) Cash Flow (II) $- -$ 0 71,000 17,300 1 33,000 9,350 2 33,000 9,350 3 33,000 9,350 a-1.If the required return is 12 percent, what is the profitability index for both projects? (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.) Project I Project II a- If the company applies the profitability index decision rule, which project should the 2. firm accept? O Project I ○ Project II b- What is the NPV for both projects? (A negative answer should be indicated by a 1. minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

The Michner Corporation is trying to choose between the following two mutually
exclusive design projects:
Year Cash Flow (1) Cash Flow (II)
0
-$
71,000
-$
17,300
1
33,000
9,350
2
33,000
9,350
3
33,000
9,350
a-1.If the required return is 12 percent, what is the profitability index for both projects?
(Do not round intermediate calculations and round your answers to 3 decimal
places, e.g., 32.161.)
Project I
Project II
a- If the company applies the profitability index decision rule, which project should the
2. firm accept?
○ Project I
○ Project II
b- What is the NPV for both projects? (A negative answer should be indicated by a
1. minus sign. Do not round intermediate calculations and round your answers to 2
decimal places, e.g., 32.16.)

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