You are asked to evaluate the following 2 projects for the Norton corporation. Use a discount rate of 12%
project x. Project Y
($16,000) ($36,000)
year. cash flow. year. cash flow
1. $8,000. 1. $ 18,000
2. 6,000. 2. 11,000
3. 7,000. 3. 12,000
4. 6,600. 4. 14,000
a. calculate the profitability index for project x
b. calculate the profitability index for project y