Question

The Sloan Corporation is trying to choose between the following two mutually exclusive design projects: Cash Flow 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? |

Answer #1

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...

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 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
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:
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.)

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...

You are considering the following two
mutually exclusive projects with the following cash flows:
Project
A
Project B
Year Cash
Flow
Year Cash Flow
0
-$75,000
0 -$70,000
1
$19,000
1 $10,000
2
$48,000
2 $16,000
3
$12,000
3 $72,000
Required rate of
return
10
%
13 %
Calculate the NPV, IRR,...

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...

Consider the following cash flows on two mutually exclusive
projects for the Bahamas Recreation Corporation. Both
projects require an annual return of 15 percent.
As a financial analyst for thecompany, you are asked the
following questions.
a.If your decision rule is to accept the project with the
greater IRR, which project should you choose? Explain why
b. Since you are fully aware of the IRR rule's scale
problem, you calculate the incremental IRR for the cash
flows. Based on your computation, which project...

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...

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