esThe Michner Corporation is trying to choose between the following two mutuallyexclusive design projects:Year Cash Flow (1) Cash Flow (II)-$0123Project IProject II67,00030,50030,50030,500a-1.If the required return is 11 percent, what is the profitability index for both projects?(Do not round Intermediate calculations and round your answers to 3 decimalplaces, e.g., 32.161.)a. If the company applies the profitability index decision rule, which project should the2. firm accept?Project IProject II17,7009,5509,5509.550O Project IO Project IIb- What is the NPV for both projects? (A negative answer should be Indicated by a1. minus sign. Do not round Intermediate calculations and round your answers to 2decimal places, e.g., 32.16.)b-If the company applies the NPV decision rule, which project should it take?2.O Project IO Project II

Given required rate of return for both the project =11% First we have to find out the total Present…

Answered: O O D 9,550 9,550 9,550

Business

Finance

O O D 9,550 9,550 9,550

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter26: Capital Investment Analysis

Section: Chapter Questions

Problem 2CMA: Staten Corporation is considering two mutually exclusive projects. Both require an initial outlay of...

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Question

es
The Michner Corporation is trying to choose between the following two mutually
exclusive design projects:
Year Cash Flow (1) Cash Flow (II)
-$
0
1
2
3
Project I
Project II
67,000
30,500
30,500
30,500
a-1.If the required return is 11 percent, what is the profitability index for both projects?
(Do not round Intermediate calculations and round your answers to 3 decimal
places, e.g., 32.161.)
a. If the company applies the profitability index decision rule, which project should the
2. firm accept?
Project I
Project II
17,700
9,550
9,550
9.550
O Project I
O Project II
b- What is the NPV for both projects? (A negative answer should be Indicated by a
1. minus sign. Do not round Intermediate calculations and round your answers to 2
decimal places, e.g., 32.16.)
b-
If the company applies the NPV decision rule, which project should it take?
2.
O Project I
O Project II

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