Question

Suppose you are given the following two projects A and B with the cash flows below,...

Suppose you are given the following two projects A and B with the cash flows below, if the cost of capital is 10%, what is the Profitability Index (PI) of projects A and B?

Year Project A Project B
0 -5000 -6000
1 1500 1500
2 2000 2500
3 3000 4000
4 3500 4000

1.457;1.492

1.457;1.340

1.532;1.528

1.639;1.340

1.622;1.409

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