1. Roy’s Welding projects cash flows of $13,500, $20,400, and $32,900 for Years 1 to 3 for a project with an initial cost of $45,000. What is the profitability index given an assigned discount rate of 15 percent?
A. .92
B. .97
C. 1.03
D. 1.08
E. 1.14
2. A project has cash flows of -$119,000, $52,800, $60,200, and $33,100 for years 0 to 3, respectively. The required rate of return is 12 percent. Based on the net present value of _____, you should _____ the project.
A. $230.75; accept
B. -$1,995.84; reject
C. $283.60; accept
D. -$147.60; accept
E. -$306.15; reject