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

8. agreement and disagreement among economists suppose that bob, an economist from a university in arizona, and cho, an economist from a public television program, are arguing over saving incentives. the following dialogue shows an excerpt from their debate: cho: i think it's safe to say that, in general, the savings rate of households in today's economy is much lower than it really needs to be to sustain an improvement in living standards. bob: i think a switch from the income tax to a consumption tax would bring growth in living standards. cho: you really think households would change their saving behavior enough in response to this to make a difference? because i don't. the disagreement between these economists is most likely due to . despite their differences, with which proposition are two economists chosen at random most likely to agree? rent ceilings reduce the quantity and quality of available housing. immigrants receive more in government benefits than they contribute in taxes. having a single income tax rate would improve economic performance.

Gerda, a real estate agent, is selling a moderately priced house in a subdivision. she knows from her uncle that the factory being built half a mile from the subdivision will be manufacturing dog food, using a process that creates a very strong odor that permeates the surrounding neighborhood. a buyer, who is unaware of the type of factory under construction, makes an offer on one of the houses gerda is selling, and within a short time, the deal goes through. what does this scenario best illustrate?

Suppose the government enacts a stimulus program composed of $600 billion of new government spending and $300 billion of tax cuts for an economy currently producing a gdp of $14 comma 000 billion. if all of the new spending occurs in the current year and the government expenditure multiplier is 1.5, the expenditure portion of the stimulus package will add nothing percentage points of extra growth to the economy. (round your response to two decimal places.)