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The Sloan Corporation is trying to choose between the following two mutually exclusive design projects: Cash Flow Cash Flow Year (1) (II) 555,000 $ 18,900 1 25,000 10,150 10,150 10,150 2 25,000 3 25,000

The Sloan Corporation is trying to choose between the following two mutually exclusive design projects: Cash Flow Cash Flow Year (1) (II) 555,000 $ 18,900 1 25,000 10,150 10,150 10,150 2 25,000 3 25,000

Essentials Of Investments
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
Section: Chapter Questions
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The Sloan Corporation is trying to choose between the following two mutually exclusive design projects: Cash Flow Cash Flow Year (1) (II) 555,000 518,900 10,150 10,150 10,150 1 25,000 25,000 25,000 2 3 a-1lf the required return is 10 percent, what is the profitability index for both projects? (Do not round intermediate calculations. 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 2 should the firm accept? O Project I O Project II b-1What is the NPV for both projects? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Project I Project II
Transcribed Image Text:The Sloan Corporation is trying to choose between the following two mutually exclusive design projects: Cash Flow Cash Flow Year (1) (II) 555,000 518,900 10,150 10,150 10,150 1 25,000 25,000 25,000 2 3 a-1lf the required return is 10 percent, what is the profitability index for both projects? (Do not round intermediate calculations. 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 2 should the firm accept? O Project I O Project II b-1What is the NPV for both projects? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Project I Project II
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