Problem:
The required return is 12% on a project.
Year Project Y Project Z
0 -35,000 -60,000
1 16,000 25,000
2 13,000 24,000
3 15,000 22,000
4 11,000 21,000
a) What is the profitability index for each project?
b) What is the NPV for each project?
c) Which (if any) of the projects should the company accept?