Cori's Sausage Corporation is trying to choose between the following two mutually exclusive design projects:...
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Accounting
Cori's Sausage Corporation is trying to choose between the following two mutually exclusive design projects:
Year
Cash Flow (I)
Cash Flow (II)
0
-$58,000
-$18,600
1
$37,000
$10,000
2
$37,000
$10,000
3
$37,000
$10,000
a. If the required return is 10 percent, what is the profitability index for each project?
a-2 if the company applies the profitability index decision rule, which project should the firm accept?
b. What is the NPV for each project?
Cori's Sausage Corporation is trying to choose between the following two mutually exclusive design projects:
Year | Cash Flow (I) | Cash Flow (II) |
0 | -$58,000 | -$18,600 |
1 | $37,000 | $10,000 |
2 | $37,000 | $10,000 |
3 | $37,000 | $10,000 |
a. If the required return is 10 percent, what is the profitability index for each project?
a-2 if the company applies the profitability index decision rule, which project should the firm accept?
b. What is the NPV for each project?
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