Cori's Sausage Corporation is trying to choose between the following two mutually exclusive design projects:
Year Cash Flow (l) Cash Flow (ll)
0 -$65,000 -$ 17,900
1 30,000 9,650
2 30,000 9,650
3 30,000 9,650
a-1. If the required return is 12 percent, what is the profitability index for each project? (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.) Profitability Index
Project I ____
Project II ______
a-2. If the company applies the profitability index decision rule, which project should the firm accept?
Project I
Project II
b-1. What is the NPV for each project? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
Project I $ ____
Project II $____
b-2. If the company applies the NPV decision rule, which project should it take?
Project I
Project II