20. Profitability Index. Consider the following projects: See picture attached.

Question

20. Profitability Index. Consider the following projects: See picture attached.

a. calculate the profitability index for A and B assuming a 22% opportunity cost of capital.

b. according to the profitability index rule, which project (s) should you accept?

t NPV if the discount rate is s . )%? 40%? ositive at midrange discount rates but not at very high ex. What is the profitability index of a project that costs 00 in years 1 and 2 and $5,000 in years 3 and 4? TH x. Consider the following projects: (LO8-3) Project Co C2 $2,100 +$2,000 +$1,200 2,100 1,440 1,728 ontability index for A and B assuming a 22% oppo eprofitability index rule, which project(s) should y You are a manager with an investment budget of $ jects. Investment and cash-flow figures are in milli Discount Rate, % 10 Annual Pro Cash Flow Investment

Explanation / Answer

20. Profitability Index. Consider the following projects: See picture attached.

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