Problem 9-16 Problems with Profitability Index [LO1, 7] The Sloan Corporation is trying to choose...
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Problem 9-16 Problems with Profitability Index [LO1, 7] The Sloan Corporation is trying to choose between the following two mutually exclusive design projects: Year 0 1 2 3 Cash Flow (0) -$60,000 28,300 28,300 28,300 Cash Flow (II) -$18,400 9,900 9.900 9,900 a-1 If the required return is 11 percent, what is the profitability index for both projects? (Do not round intermediate calculations. Round your answers to 3 decimal places, e.g., 32.161.) Project 1 Project II a-21f the company applies the profitability index decision rule, which project should the firm accept? O Project 1 O Project II b-1 What is the NPV for both projects? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Project Project 11 b-2If the company applies the NPV decision rule, which project should it take? O Project 1 O Project 11
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