Investment requiredPresent value of cash inflows -Net present valueLife of the project.Internal rate of return1Required 1$ (270,000)336,140$ 66,140Project6 years18%Complete this question by entering your answers in the tabs below.Required 2Compute the profitability index for each investment project.Note: Round your answers to 2 decimal places.ProfitabilityIndex2$ (450,000)522,970$ 72,970Project Number3 years19%The net present values above have been computed using a 10% discount rate. Limited funds are available for investment, so thecompany can't accept all of the available projects.Required:1. Compute the profitability index for each investment project.2. Rank the four projects according to preference, in terms of net present value, profitability index, and internal rate of return.3$ (360,000)433,400$ 73,40012 years.14$ (480,000)567,270$ 87,2706 years16%

The concept of net present value is used to determine the current worth of all projected future cash…

Investment required Present value of cash inflows Net present value Life of the project Internal rate of return 1 $ (270,000) 336,140 $ 66,140 Required 1 Required 2 6 years 18% 2 $ (450,000) 522,970 $ 72,970 Compute the profitability index for each investment project. Note: Round your answers to 2 decimal places. Project Number 3 years 19% 3 $ (360,000) 433,400 $ 73,400 12 years. 14% 4 $ (480,000) 567,270 $ 87,270 The net present values above have been computed using a 10% discount rate. Limited funds are available for investment, so the company can't accept all of the available projects. Required: 1. Compute the profitability index for each investment project. 2. Rank the four projects according to preference, in terms of net present value, profitability index, and internal rate of return. Complete this question by entering your answers in the tabs below. 6 years 16%

Investment required Present value of cash inflows Net present value Life of the project Internal rate of return 1 $ (270,000) 336,140 $ 66,140 Required 1 Required 2 6 years 18% 2 $ (450,000) 522,970 $ 72,970 Compute the profitability index for each investment project. Note: Round your answers to 2 decimal places. Project Number 3 years 19% 3 $ (360,000) 433,400 $ 73,400 12 years. 14% 4 $ (480,000) 567,270 $ 87,270 The net present values above have been computed using a 10% discount rate. Limited funds are available for investment, so the company can't accept all of the available projects. Required: 1. Compute the profitability index for each investment project. 2. Rank the four projects according to preference, in terms of net present value, profitability index, and internal rate of return. Complete this question by entering your answers in the tabs below. 6 years 16%

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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