Problem: B.C. Rogers, Inc., is presented with the following two mutually exclusive projects. The required return is 15%.
a) What is the profitability index for each project?
b) What is the NPV for each project?
c) Which, if either, of the projects should the company choose?
Year Project K Project S
0 -35,000 -350,000
1 18,000 120,000
2 17,000 115,000
3 16,000 110,000
4 15,000 105,000
5 14,000 100,000.