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Does the profitability index rank the projects correctly

Problem: The following are the cash flows of two projects:

Year Project A Project B
0 --$400 --$400
1 230 300
2 230 300
3 230 300
4 230

a. If the opportunity cost of capital is 10%, what is the profitability index for each project? (Do not round intermediate calculations. Round your answers to 4 decimal places.)

b. Does the profitability index rank the projects correctly?

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Finance Basics: Does the profitability index rank the projects correctly

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