Question

1) Calculating PI & NPV The Multigig Computer Corporation is trying to choose       between the...

1) Calculating PI & NPV The Multigig Computer Corporation is trying to choose
      between the following two mutually exclusive design projects:

Year              Cash Flow (1)      Cash Flow (2)

0                        -15 000                    - 2 000

1                          8 500                      2 500

2                          8 500                      2 500

3                          8 500                      2 500

(a) If the required rate is 9% and Multigig Computer applies the profitability index
      decision rule, which project should the firm accept?

(b) If the company applies NPV decision rule, which project should it take?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
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...
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...
Problems with Profitability Index. The Moby Computer Corporation is trying to choose between the following mutually...
Problems with Profitability Index. The Moby Computer Corporation is trying to choose between the following mutually exclusive design projects using a required return of 9%: Year Cashflow (I) Cashflow (II) 0 -1000000 -10000 1 410000 6800 2 410000 6800 3 410000 6800 1. Find the PI for projects I, and II (rounding to the second decimal) 2. Find the NPV for projects I, and II 3. Using the PI decision rule, what project would I choose, and what project would...
The Sloan Corporation is trying to choose between the following two mutually exclusive design projects: Cash...
The Sloan Corporation is trying to choose between the following two mutually exclusive design projects: Cash Flow Year (I) Cash Flow Cash Flow (II) 0 –$70,000 -17,400 1 31,500 9400 2 31,500 9400 3 31,500 9400 a.If the required return is 11 percent, what is the profitability index for both projects? Project A and B b.What is the NPV for both projects?
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:   ...
Cori's Sausage Corporation is trying to choose between the following two mutually exclusive design projects:    Year Cash Flow (I) Cash Flow (II) 0 –$ 52,000 –$ 26,800 1 25,300 13,800 2 25,300 13,800 3 25,300 13,800     a-1. If the required return is 10 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.) b-1. What is the NPV for each project?
Cori's Sausage Corporation is trying to choose between the following two mutually exclusive design projects:   ...
Cori's Sausage Corporation is trying to choose between the following two mutually exclusive design projects:    Year Cash Flow (I) Cash Flow (II) 0 –$ 51,000 –$ 25,800 1 25,000 13,500 2 25,000 13,500 3 25,000 13,500     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.)       
   1. NPV (Net Present Value) versus PI (Profitability Index) Consider the following two mutually exclusive...
   1. NPV (Net Present Value) versus PI (Profitability Index) Consider the following two mutually exclusive projects available to Global Investments, Inc.: Projects C0 C1 C2 PI NPV A -$1000 $1000 $500 1.32 $322 B -500 500 400 1.57 285 The appropriate discount rate for the projects is 10%. Global Investments chose to undertake project A. At a luncheon for shareholders, the manager of a pension fund that owns a substantial amount of the firm’s stock asks you why the...
All projects (A to G) are 7-year projects. NPV = Net present value. IRR = internal...
All projects (A to G) are 7-year projects. NPV = Net present value. IRR = internal rate of return. MIRR = modified internal rate of return. PI = profitability index. Criteria:                Project_A         Project_B             Project_C         Project_D          Project_E               Project_F             Project_G NPV= $137,083 $31,290 $6,016 $7,647 ($584) $12,521 $9,214 IRR= 31.80% 48.34% 12.03% 11.30% 9.94% 26.79% 37.87% MIRR= 18.52% 23.52% 10.62% 10.59% 9.97% 23.53% 20.76% PI= 1.69 2.25 1.040 1.038 0.999 2.25 1.92 The discounting rate...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT