You are analyzing two proposed capital investments with the following cash flows:
Year Project X Project Y
0 - $20,000 - $20,000
1 12,830 7,070
2 5,560 7,070
3 5.560 7,070
4 2,020 7,070
The cost of capital for both projects is 10 percent.
Calculate the profitability index (PI) for each project. (Do not round discount factors. Round intermediate calculations to 2 decimal places,
eg. 15.25 and final answers to 4 decimal places, eg. 1.2527.)
The PI for project X is 1.0734 and the PI for project Y is 1.0574