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Consider the following three projects; assume 14 percent cost of capital. Period Project A    Project...

  1. Consider the following three projects; assume 14 percent cost of capital.

Period Project A    Project B                   Project C

                  T=0                                               ($3,000)                     ($5,000)                     ($2,000)

                  T=1                                               $1,000                       $1,500                            $900

                  T=2                                               $1,200                      $1,500                            $900

                  T=3                                               $1,500                      $2,500                            $700

                  T=4                                               $1,500                       $2,500                            $700

                        

When you have only $5,000 to support the above projects, which project (or projects) should be chosen under the Profitability Index?

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Expert Solution

jeff jeffy answered 2 years ago
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