Problems with Profitability Index. The Moby Computer Corporation is trying to choose between the following mutually exclusive design projects using a required return of 9%:
Year |
Cashflow (I) |
Cashflow (II) |
0 |
-1000000 |
-10000 |
1 |
410000 |
6800 |
2 |
410000 |
6800 |
3 |
410000 |
6800 |
1. Find the PI for projects I, and II (rounding to the second decimal)
2. Find the NPV for projects I, and II
3. Using the PI decision rule, what project would I choose, and what project would i choose if i used the NPV rule?
*Using a financial calculator show and explain work.
Thank you!
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