Profitability Index
Response to the following problem:
California Company is trying to determine the relative profitability of two alternative color, laser printers. Printer A requires an initial cash outlay of $4,000 and has a net present value of $250. Printer B requires an initial cash outlay of $3,000 and has a net present value of $175. Compute the profitability index of each printer. Which alternative is more profitable?