Current Attempt in Progress Yo

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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