You are asked to evaluate the following two projects for the Norton corporation. Use a discount rate of 14 percent. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. Project X (Videotapes of the Weather Report) ($42,000 Investment) Project Y (Slow-Motion Replays of Commercials) ($62,000 Investment) Year Cash Flow Year Cash Flow 1 $ 21,000 1 $ 31,000 2 19,000 2 24,000 3 20,000 3 25,000 4 19,600 4 27,000
a. Calculate the profitability index for project X. (Do not round intermediate calculations and round your answer to 2 decimal places.) Profitability index
b. Calculate the profitability index for project Y. (Do not round intermediate calculations and round your answer to 2 decimal places.) Profitability index