NPV Analysis. The Health Maintenance Organization, Ltd., is considering offering extended service hours during weekday and weekend periods. The company has the following projections for a two-year planning horizon:
A. Calculate the net present value for each service. Which is more desirable according to the NPV criterion?
B. Calculate the profitability index for each service. Which is more desirable according to the PI criterion?
C. Under what conditions would either or both of the services be undertaken?

Question

NPV Analysis. The Health Maintenance Organization, Ltd., is considering offering extended service hours during weekday and weekend periods. The company has the following projections for a two-year planning horizon:
  A. Calculate the net present value for each service. Which is more desirable according to the NPV criterion?
B. Calculate the profitability index for each service. Which is more desirable according to the PI criterion?
C. Under what conditions would either or both of the services be undertaken?

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The Answer of NPV Analysis. The Health Maintenance Organization, Ltd., is considering offering extended service hours during weekday and weekend periods. The company has the following projections for a two-year planning horizon:
  A. Calculate the net present value for each service. Which is more desirable according to the NPV criterion?
B. Calculate the profitability index for each service. Which is more desirable according to the PI criterion?
C. Under what conditions would either or both of the services be undertaken?