The Whenworth Corporation is trying to choose between the following two mutually exclusive design projects: Cash Flow (I) Cash Flow (II) -$87,000 36,900 47,000 27,000 Year -$55,000 11,700 34,500 28,500 1 2 3. a-1. If the required return is 10 percent, what is the profitability index for each project? (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.) a-2. If the company applies the profitability index decision rule, which project should it tolco?
The Whenworth Corporation is trying to choose between the following two mutually exclusive design projects: Cash Flow (I) Cash Flow (II) -$87,000 36,900 47,000 27,000 Year -$55,000 11,700 34,500 28,500 1 2 3. a-1. If the required return is 10 percent, what is the profitability index for each project? (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.) a-2. If the company applies the profitability index decision rule, which project should it tolco?
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
Problem 1PS
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Question
![The Whenworth Corporation is trying to choose between the following two mutually
exclusive design projects:
Year Cash Flow (I) Cash Flow (II)
-$87,000
36,900
47,000
27,000
-$55,000
11,700
34,500
28,500
1
3
a-1. If the required return is 10 percent, what is the profitability index for each project?
(Do not round intermediate calculations and round your answers to 3 decimal
places, e.g., 32.161.)
a-2. If the company applies the profitability index decision rule, which project should it
take?
b-1. If the required return is 10 percent, what is the NPV for each project? (Do not round
intermediate calculations and round your answers to 2 decimal places, e.g.,
32.16.)
b-2. If the company applies the net present value decision rule, which project should it
take?
a-1. Project I
Project II
а-2.
b-1. Project I
Project II
b-2.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4a35ce65-2236-4599-bfcf-d7612396ce76%2F8be70f91-3296-48cb-8c83-e44a30c9cc91%2Fxo6mqf_processed.png&w=3840&q=75)
Transcribed Image Text:The Whenworth Corporation is trying to choose between the following two mutually
exclusive design projects:
Year Cash Flow (I) Cash Flow (II)
-$87,000
36,900
47,000
27,000
-$55,000
11,700
34,500
28,500
1
3
a-1. If the required return is 10 percent, what is the profitability index for each project?
(Do not round intermediate calculations and round your answers to 3 decimal
places, e.g., 32.161.)
a-2. If the company applies the profitability index decision rule, which project should it
take?
b-1. If the required return is 10 percent, what is the NPV for each project? (Do not round
intermediate calculations and round your answers to 2 decimal places, e.g.,
32.16.)
b-2. If the company applies the net present value decision rule, which project should it
take?
a-1. Project I
Project II
а-2.
b-1. Project I
Project II
b-2.
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