Question
You are asked to evaluate the following two projects for the Norton corporation. Use a discount...
You are asked to evaluate the following two projects for the Norton corporation. Use a discount rate of 12 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) ($36,000 Investment) Project Y (Slow-Motion Replays of Commercials) ($56,000 Investment) Year Cash Flow Year Cash Flow 1 $ 18,000 1 $ 28,000 2 16,000 2 21,000 3 17,000 3 22,000 4 16,600 4 24,000
a. Calculate the profitability index for project X. (Do not round intermediate calculations and round your answer to 2 decimal places.)
b. Calculate the profitability index for project Y. (Do not round intermediate calculations and round your answer to 2 decimal places.)
c. Which project would you select based on the profitability index?
Homework Answers
Answer #1
Not the answer you're looking for?
Similar Questions
You are asked to evaluate the following two projects for the Norton corporation. Use a discount...
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)
($14,000 Investment
Project Y (Slow-Motion
Replays of Commercials)
($34,000 Investment)
Year
Cash Flow
Year
Cash Flow
1
$7,000
1
$17,000
2
$5,000
2
$10,000
3
$6,000
3
$11,000
4
$5,600
4
$13,000
a. Calculate...
You are asked to evaluate the following two projects for the Norton corporation. Use a discount...
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)
($34,000 Investment)
Project Y (Slow-Motion
Replays of Commercials)
($54,000 Investment)
Year
Cash Flow
Year
Cash Flow
1
$
17,000
1
$
27,000
2
15,000
2
20,000
3
16,000
3
21,000
4
15,600
4
23,000...
You are asked to evaluate the following two projects for the Norton corporation. Use a discount...
You are asked to evaluate the following two projects for the
Norton corporation. Use a discount rate of 13 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)
($44,000 Investment)
Project Y (Slow-Motion
Replays of Commercials)
($64,000 Investment)
Year
Cash Flow
Year
Cash Flow
1
$
22,000
1
$
32,000
2
20,000
2
25,000
3
21,000
3
26,000
4
20,600
4
28,000...
You are asked to evaluate the following two projects for the Norton corporation. Use a discount...
You are asked to evaluate the following two projects for the
Norton corporation. Use a discount rate of 14 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)
($30,000 Investment)
Project Y (Slow-Motion
Replays of Commercials)
($50,000 Investment)
Year
Cash Flow
Year
Cash Flow
1
$
15,000
1
$
25,000
2
13,000
2
18,000
3
14,000
3
19,000
4
13,600
4
21,000...
Assume that you are risk averse and have the following three choices. Expected Value Standard Deviation...
Assume that you are risk averse and have the following three
choices.
Expected
Value
Standard
Deviation
A
$
1,830
$
970
B
2,760
1,850
C
1,680
1,330
a. Compute the coefficient of variation for
each choice. (Round the final answers to 2 decimal
places.)
Projects
Coefficient
of variation
A
B
C
b. Which project would you select?
Project B
Project C
Project A
You are asked to evaluate the following two projects for Boring
Corporation. Use a discount rate...
The Bosa Corporation is trying to choose between the following two mutually exclusive design projects: Year...
The Bosa Corporation is trying to choose between the following
two mutually exclusive design
projects:
Year Cash Flow (I) Cash Flow (II)
0 –$66,000 –$ 17,800
1 29,000 9,600
2 29,000 9,600
3 29,000 9,600
a-1 If the required return for both projects is 10 percent, what
is the profitability index for both projects? (Do not round
intermediate calculations and round your answers to 3 decimal
places, e.g., 32.161.)
Profitability Index
Project I
Project II
b-1 What is the NPV...
Cori's Sausage Corporation is trying to choose between the following two mutually exclusive design projects: Year...
Cori's Sausage Corporation is trying to choose between the
following two mutually exclusive design projects:
Year
Cash Flow (I)
Cash Flow (II)
0
–
$
62,000
–
$
18,200
1
33,000
9,800
2
33,000
9,800
3
33,000
9,800
a-1. If the required return is 12 percent, what
is the profitability index for each project? (Do not round
intermediate calculations and round your answers to 3 decimal
places, e.g., 32.161.)
Profitability Index
Project I
Project II
a-2. If the...
The Sloan Corporation is trying to choose between the following two mutually exclusive design projects: ...
The Sloan Corporation is trying to choose between the following
two mutually exclusive design projects:
Year
Cash Flow
(I)
Cash Flow
(II)
0
–$
71,000
–$
17,300
1
33,000
9,350
2
33,000
9,350
3
33,000
9,350
a-1
If the required return is 12 percent, what is the profitability
index for both projects? (Do not round intermediate
calculations. Round your answers to 3 decimal places, e.g.,
32.161.)
Profitability
Index
Project I
Project II
a-2
If...
The Sloan Corporation is trying to choose between the following two mutually exclusive design projects: ...
The Sloan Corporation is trying to choose between the following
two mutually exclusive design projects:
Year
Cash Flow
(I)
Cash Flow
(II)
0
–$
54,000
–$
19,000
1
25,000
10,200
2
25,000
10,200
3
25,000
10,200
a-1
If the required return is 11 percent, what is the profitability
index for both projects? (Do not round intermediate
calculations. Round your answers to 3 decimal places, e.g.,
32.161.)
Profitability
Index
Project I
Project II
a-2
If...
Consider the following projects: Cash Flows ($) Project C0 C1 D –10,900 21,800 E –20,900 36,575...
Consider the following projects: Cash Flows ($) Project C0 C1 D
–10,900 21,800 E –20,900 36,575 Assume that the projects are
mutually exclusive and that the opportunity cost of capital is 8%.
a. Calculate the profitability index for each project. (Do not
round intermediate calculations. Round your answers to 2 decimal
places.) Project Profitability Index D E b-1. Calculate the
profitability-index using the incremental cash flows. (Do not round
intermediate calculations. Round your answer to 2 decimal places.)
Profitability-index b-2....
ADVERTISEMENT
Need Online Homework Help?
Get Answers For Free
Most questions answered within 1 hours.
ADVERTISEMENT
Active Questions
asked 13 minutes ago
asked 14 minutes ago
asked 39 minutes ago
asked 39 minutes ago
asked 46 minutes ago
asked 46 minutes ago
asked 51 minutes ago
asked 55 minutes ago
asked 1 hour ago
asked 1 hour ago
asked 1 hour ago
asked 1 hour ago