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Suppose the following two independent investment opportunities are available to Relax, Inc. The appropriate discount rate is 11 percent.

Year	Project Alpha	Project Beta
0	-$3,100	-$4,700
1	1,600	1,000
2	1,500	3,100
3	1,100	3,300

a. Compute the profitability index for each of the two projects. (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.)

Profitability Index

Project Alpha

Project Beta

b. Which project should the company accept based on the profitability index rule?

Project Beta

Project Alpha

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92844898

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