The treasurer of Amaro Canned Fruits, Inc., has projected the cash flows of projects A, B, and C as follows: Year Project A Project B Project C 0 ? $ 180,000 ? $ 330,000 ? $ 180,000 1 116,000 212,000 126,000 2 116,000 212,000 96,000 Suppose the relevant discount rate is 9 percent per year.
a. Compute the profitability index for each of the three projects. (Do not round intermediate calculations. Round your answers to 2 decimal places, e.g., 32.16.) Profitability index Project A Project B . Project C
b. Compute the NPV for each of the three projects. (Do not round intermediate calculations. Round your answers to 2 decimal places, e.g., 32.16.) NPV Project A $ Project B $ Project C $
c. Suppose these three projects are independent. Which project(s) should Amaro accept based on the profitability index rule? Project A Project B Project C Project A, Project B, Project C Project A, Project B Project A, Project C Project B, Project C
d. Suppose these three projects are mutually exclusive. Which project(s) should Amaro accept based on the profitability index rule? Project A Project B Project C Project A, Project B, Project C Project A, Project B Project A, Project C Project B, Project C
e. Suppose Amaro’s budget for these projects is $510,000. The projects are not divisible. Which project(s) should Amaro accept? Project A Project B Project C Project A, Project B, Project C Project B, Project C Project B, Project A Project A, Project C.