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Suppose the following two independent investment opportunities are available to Greenplain, Inc. The appropriate discount rate is 10 percent.

Year Project Alpha Project Beta

0 -$1,500 -$2,500

1 800 500

2 900 1,900

3 700 2,100

a. Compute the profitability index for each of the two projects.

b. Which project(s) should Greenplain accept based on the profitability index rule?

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M950345

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