You are analyzing two proposed capital investments with the following cash flows: Year Project X Project Y 0 - $20,000 -$20,000 1 11,830 6,670 2 5,660 6,670 3 5.660 6,670 4 2,020 6,670 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 places, e.g. 15.25 and final answers to 4 decimal places, e.g. 1.2527.) The PI for project X is and the PI for project Y is Which project, or projects, should be accepted if you have unlimited funds to invest? If you have unlimited funds you should invest in Which project should be accepted if they are mutually exclusive? f they are mutually exclusive you should invest in
You are analyzing two proposed capital investments with the following cash flows: Year Project X Project Y 0 - $20,000 -$20,000 1 11,830 6,670 2 5,660 6,670 3 5.660 6,670 4 2,020 6,670 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 places, e.g. 15.25 and final answers to 4 decimal places, e.g. 1.2527.) The PI for project X is and the PI for project Y is Which project, or projects, should be accepted if you have unlimited funds to invest? If you have unlimited funds you should invest in Which project should be accepted if they are mutually exclusive? f they are mutually exclusive you should invest in
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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Transcribed Image Text:You are analyzing two proposed capital investments with the following cash flows:
Year
Project X
Project Y
0
- $20,000
-$20,000
1
11,830
6,670
2
5,660
6,670
3
5.660
6,670
4
2,020
6,670
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 places, e.g. 15.25 and final answers to 4 decimal places, e.g. 1.2527.)
The PI for project X is
and the PI for project Y is
Which project, or projects, should be accepted if you have unlimited funds to invest?
If you have unlimited funds you should invest in
Which project should be accepted if they are mutually exclusive?
f they are mutually exclusive you should invest in
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