Zellars, Inc. Is considering two projects.
Project A costs $75,000 and is expected to generate $48,000 in year one and $45,000 in year two.
Project B costs $80,000 and is expected to generate $34,000 on year one, $37,000 in year two, $26,000 in year three, and $25,000 in year four.
Zellars, Inc.'s required rate of return for these projects is 10%. The profitability index for Project A is?© BrainMass Inc. brainmass.com October 10, 2019, 1:31 am ad1c9bdddf
Profitability Index = PV of cash flows/Initial Investment
For Project ...
The solution explains how to calculate the profitability index for a project.