The Small Council is considering two mutually exclusive inve…
The Small Council is considering two mutually exclusive investments to strengthen the realm. Restoring King’s Landing would require an initial investment of $80,000 and provide cash flows of $34,000 a year for six years. Rebuilding Winterfell would require an initial investment of $70,000 and provide cash flows of $29,000 a year for seven years. Assume that the required rate of return is 7%. Salvage value is 0 for both projects. What is the profitability index of the investment the Small Council should choose? (Use the appropriate values from the tables provided or a financial calculator. Do not round any intermediate calculations. Round your final answer to two decimal places.)