Problem 8-23 Profitability Index (LO3) Consider the following projects: Co C₁ -$2,450 +$ 2,350 -2,450 +1,790 Project A B a. Calculate the profitability index for A and B assuming a 23% opportunity cost of capital. Note: Do not round intermediate calculations. Round your answers to 4 decimal places. Project A B Profitability index Project B b. According to the profitability index rule, which project(s) should you accept? Project A Both C₂ +$ 1,550 +1,798 0.6410 0.5490 O Neither

Problem 8-23 Profitability Index (LO3) Consider the following projects: Co C₁ -$2,450 +$ 2,350 -2,450 +1,790 Project A B a. Calculate the profitability index for A and B assuming a 23% opportunity cost of capital. Note: Do not round intermediate calculations. Round your answers to 4 decimal places. Project A B Profitability index Project B b. According to the profitability index rule, which project(s) should you accept? Project A Both C₂ +$ 1,550 +1,798 0.6410 0.5490 O Neither

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter11: The Cost Of Capital

Section: Chapter Questions

Problem 19PROB

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