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Which project has the higher npv

Problem: Profitability Index versus NPV. Consider these two projects:

Project C0 C1 C2 C3
A -$18 +$10 +$10 +$10
B -$50 +$25 +$25 +$25

a. Which project has the higher NPV if the discount rate is 10 percent?

b. Which has the higher profitability index?

c. Which project is most attractive to a firm that can raise an unlimited amount of funds to pay for its investment projects? Which project is most attractive to a firm that is limited in the funds it can raise?

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Finance Basics: Which project has the higher npv

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