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Project A1 Project A2 Investment $900,000 $1,200,000 Required at n = 0 1 $400,000 $200,000 2 $340,000 $300,000 3 $300,000 $350,000 4 $240,000 $440,000 5 $200,000 $400,000 $150,000 $350,000

Project A1 Project A2 Investment $900,000 $1,200,000 Required at n = 0 1 $400,000 $200,000 2 $340,000 $300,000 3 $300,000 $350,000 4 $240,000 $440,000 5 $200,000 $400,000 $150,000 $350,000

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Consider the following two projects:

(a) Calculate the profitability index for A1 and A2 at an interest rate of 6%.
(b) Determine which project(s) you should accept (1) if you have enough money to undertake both and (2) if you could take only one due to a budget limit.

Project A1 Project A2 Investment $900,000 $1,200,000 Required at n = 0 1 $400,000 $200,000 2 $340,000 $300,000 3 $300,000 $350,000 4 $240,000 $440,000 5 $200,000 $400,000 $150,000 $350,000
Transcribed Image Text:Project A1 Project A2 Investment $900,000 $1,200,000 Required at n = 0 1 $400,000 $200,000 2 $340,000 $300,000 3 $300,000 $350,000 4 $240,000 $440,000 5 $200,000 $400,000 $150,000 $350,000
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