Question: You are considering two mutually exclusive projects with the following cash flows. The appropriate cost of capital for Project A is 10%. The appropriate cost of capital for Project B is 14%. Find the Profitability Index and Payback Period of each project. Make sure to show your work.
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Year 0
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Year 1
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Year 2
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Year 3
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|
Project A
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-$1,000
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$500
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$600
|
$700
|
|
Project B
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-$10
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$10
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$20
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$30
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