Profitability Index versus NPV. Consider these two projects:
Project C0 C1 C2 C3
A -$36 +$20 +$20 +$20
B - 50 + 25 + 25 + 25
Q1. Which project has the highest NPV if the discount rare is 10%?
Q2. Which has the higher profitability index?
Q3. Which project is most attractive to a firm that can raise a unlimited amount of funds to pay for investment project?
Q4. Which project is most attract to a firm that limited in the funds it can raise?