Question: the treasurer of tropical fruits inc has projected the cash...

The treasurer of Tropical Fruits, Inc., has projected the cash flows of Projects A, B, and C as follows:

Year	Project A				Project B				Project C
0	−$	215,000			−$	380,000			−$	215,000
1		138,000				232,000				152,000
2		138,000				232,000				118,000

Suppose the relevant discount rate is 9 percent per year.

a. Compute the profitability index for each of the three projects. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

	Profitability index
Project A
Project B
Project C

b. Compute the NPV for each of the three projects. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

	NPV
Project A	$
Project B	$
Project C	$

c. Suppose these three projects are independent. Which project(s) should the company accept based on the profitability index rule?

• Project A

• Project B

• Project C

• Project A, Project B, Project C

• Project A, Project B

• Project A, Project C

• Project B, Project C

d. Suppose these three projects are mutually exclusive. Which project(s) should the company accept based on the profitability index rule?

• Project A

• Project B

• Project C

• Project A, Project B, Project C

• Project A, Project B

• Project A, Project C

• Project B, Project C

e. Suppose the budget for these projects is $595,000. The projects are not divisible. Which project(s) should be accepted?

• Project A

• Project B

• Project C

• Project A, Project B, Project C

• Project B, Project C

• Project B, Project A

• Project A, Project C