Current Attempt in Progress
You are analyzing two proposed capital investments with the following cash flows:
| Year | Project X | Project Y | |||
|---|---|---|---|---|---|
|
0 |
– $20,000 | – $20,000 | |||
|
1 |
12,530 | 6,570 | |||
|
2 |
6,360 | 6,570 | |||
|
3 |
6,160 | 6,570 | |||
|
4 |
2,020 | 6,570 |
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 answer to 4 decimal places, e.g. 1.2527.)
| The PI for project X is enter the profitability index for project X rounded to 4 decimal places and the PI for project Y is enter the profitability index for project Y rounded to 4 decimal places . |
Which project, or projects, should be accepted if you have unlimited funds to invest?
| If you have unlimited funds you should invest in select a project both projectsproject Yneither projectproject X. |
Which project should be accepted if they are mutually exclusive?
| If they are mutually exclusive you should invest in select a project neither projectProject YProject X. |
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