You are asked to evaluate the following two projects for Boring Corporation. Use a discount rate of 11 percent. Use Appendix B. Project X (DVDs of the Weather Reports) ($38,000 Investment) Year Cash Flow 1 $19,000 2 17,000 3 18,000 4 17,600 Project Y (Slow-Motion Replays of Commercials) ($58,000 Investment) Year Cash Flow $29,000 22,000 3 23,000 4 25,000 a. Calculate the profitability index for project X. (Round "PV Factor" to 3 decimal places. Round the final answer to 2 decimal places.) PI b. Calculate the profitability index for project Y. (Round "PV Factor" to 3 decimal places. Round the final answer to 2 decimal places.) PI c. Using the NPV method combined with the Pl approach, which project would you select? Use a discount rate of 11 percent.
