Problem:
You are asked to evaluate two projects for Adventures Club Inc. Using the net present Value method combined with the profitability index approach, which project would you select? Use a discount rate of 12 percent.
Project X (trips to Disneyland) Project Y (international film festivals)
($10,000 Investment) ($22,000 investment)
Year cash flow Year cash flow
1 $4,000 1 10,800
2 5,000 2 9,600
3 4,200 3 6,000
4 3,600 4 7,000