You and a coworker are analyzing two proposed capital investments with the following cash flows: Year Project A Project B 0 -$22,000 -$38,000 1 17,000 9,500 2 5.400 9,500 3 5,400 9,500 4 2,000 26,600 The cost of capital for both projects is 10 percent. Calculate the profitability index (PI) for each project. (Do not round discount factors. Round intermediate calculations to 2 decimal pla e.g. 15.25 and final answer to 4 decimal places, e.g. 1.2527.)

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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You and a coworker are analyzing two proposed capital investments with the following cash flows:
Year Project A Project B
0 -$22,000 -$38,000
1
17,000
9,500
2
5.400
9,500
3
5,400
9,500
4
2,000
26,600
The cost of capital for both projects is 10 percent.
Calculate the profitability index (PI) for each project. (Do not round discount factors. Round intermediate calculations to 2 decimal pla
e.g. 15.25 and final answer to 4 decimal places, e.g. 1.2527.)
Transcribed Image Text:You and a coworker are analyzing two proposed capital investments with the following cash flows: Year Project A Project B 0 -$22,000 -$38,000 1 17,000 9,500 2 5.400 9,500 3 5,400 9,500 4 2,000 26,600 The cost of capital for both projects is 10 percent. Calculate the profitability index (PI) for each project. (Do not round discount factors. Round intermediate calculations to 2 decimal pla e.g. 15.25 and final answer to 4 decimal places, e.g. 1.2527.)
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