The Sloan Corporation is trying to choose between the following two mutually exclusive design projects:

The Sloan Corporation is trying to choose between the following two mutually exclusive design projects:

YearCash Flow

(I) Cash Flow

(II)0-$74,000  -$17,000 1 34,000   9,200 2 34,000   9,200 3 34,000   9,200 

a-1If the required return is 12 percent, what is the profitability index for both projects? (Do not round intermediate calculations. Round your answers to 3 decimal places, e.g., 32.161.)

 Profitability

Index  Project I   Project II 

a-2If the company applies the profitability index decision rule, which project should the firm accept?

   Project IProject Il

b-1What is the NPV for both projects? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

 NPV  Project I$     Project II$   

b-2If the company applies the NPV decision rule, which project should it take?

   Project IProject II

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