Current Attempt in Progress
You are analyzing two proposed capital investments with the following cash flows:
|Year||Project X||Project Y|
|– $20,000||– $20,000|
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.|