You are asked to evaluate the following two projects for the norton corporation. use a discount rate of 10 percent. use appendix b for an approximate answer but calculate your final answer using the formula and financial calculator methods.

project x (videotapes
of the weather report)
($46,000 investment)
project y (slow-motion
replays of commercials)
($80,000 investment)
year cash flow year cash flow
1 $ 30,000 1 $ 40,000
2 28,000 2 33,000
3 20,000 3 34,000
4 18,600 4 36,000

a.
calculate the profitability index for project x. (do not round intermediate calculations and round your answer to 2 decimal places.)

profitability index

b.
calculate the profitability index for project y. (do not round intermediate calculations and round your answer to 2 decimal places.)

profitability index

c.
which project would you select?

project x
project y

The bonds issued by the south foot bear a coupon rate of 7.5 percent, payable semiannually. the bonds mature in 6.5 years, sell at par, and have a $1,000 face value. what is the yield to maturity

The market for corn in country a is highly competitive. at the current market price of $5/bushel there is a shortage of 100,000 bushels of corn in this country. media reports claim that the price of corn will rise drastically in the near future. according to these reports, the neighboring country b had witnessed a similar situation recently. at the same price, the shortage in country b was also 100,000 bushels and eventually the equilibrium price in b went up to $10/bushel. both countries are known to have equal number of corn producers and the market supply of corn is identical at all prices. this, combined with the fact that consumers in the two countries also have similar tastes and preferences, led the media to conclude that the price of corn in country a would soon be as high as $10/bushel. the new equilibrium price turns out to be below $10/bushel, what inferences can be drawn?

Chip wilson has hired goldman sachs, an investment banking company, to assist him with a hostile takeover of lululemon. wilson's goal is to hire a new board of directors because he believes there is a need for a more long-term focus. goldman sachs is a proven firm at making a profit in every move that they make. if the hostile takeover does not pan out, what could be another motive for investors?