The following are the cash flows of two projects
The following are the cash flows of two projects:
18.
| The following are the cash flows of two projects: |
| Year | Project A | Project B |
| 0 | %u2212$230 | %u2212$230 |
| 1 | 110 | 130 |
| 2 | 110 | 130 |
| 3 | 110 | 130 |
| 4 | 110 | |
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| a. | If the opportunity cost of capital is 11%, what is the profitability index for each project? (Do not round intermediate calculations. Round your answers to 4 decimal places.) |
| Project | Profitability Index |
| A | |
| B | |
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| b. | Does the profitability index rank the projects correctly? | ||||
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