Caspian Sea Drinks is considering buying the J-Mix 2000. It will allow them to make and sell more product. The machine cost $1.71 million and create incremental cash flows of $603,749.00 each year for the next five years. The cost of capital is 8.77%. What is the profitability index for the J-Mix 2000? Submit Answer format: Number: Round to: 3 decimal places.

Caspian Sea Drinks is considering buying the J-Mix 2000. It will allow them to make and sell more product. The machine cost $1.71 million and create incremental cash flows of $603,749.00 each year for the next five years. The cost of capital is 8.77%. What is the profitability index for the J-Mix 2000? Submit Answer format: Number: Round to: 3 decimal places.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Find the profitability index for Oman Air conditioner Company if the initial investment is 4000 OMR and the cash Inflows are as follows: Year 1=1350 OMR; Year 2 =1400 OMR; Year 3-1450 OMR and Year 4=1500 OMR. Use discount rate as 5%. Select one:
Consider a project with an initial investment (today, t = 0) of $225,000. This project will generate cash flows of $68,750 per year for the next 6 years. The company will pay $50,000 to another for clean-up and disposal in Year 6. What is the Profitability Index (PI) of the project if shareholders demand 8.25% return? Answer in whole numbers, rounded to three decimal places.
Imagineering, Inc., is considering an investment in CAD-CAM compatible design software with the cash flow profile shown in the table below. Imagineering’s MARR is 21 %/year. End of Year Cash Flow (M$) 0 -$12 1 -$1 2 $5 3 $2 4 $5 5 $5 6 $2 7 $5 What is the future worth of this investment? $Carry all interim calculations to 5 decimal places and then round your final answer to 2 decimal places (in millions of dollars). The tolerance is ±0.2.
Cullumber Company is considering an investment that will return a lump sum of $830,000 6 years from now. Click here to view the factor table. What amount should Cullumber Company pay for this investment to earn an 12% return? (For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round answer to 2 decimal places, e.g. 25.25.) Cullumber Company should pay eTextbook and Media Save for Later Attempts: 0 of 3 used Submit Answer
Your company is considering a capital project that will require a net initial investment of $264,978. The project is expected to have a 7-year life and will generate an annual net cash inflow of $46,260. Using the present value tables, what is the internal rate of return? (Round answers to 0 decimal places, e.g. 25.) Click here to view the factor table. Internal Rate of Return eTextbook and Media
Calculate the Profitability Index for Project A A firm is considering the following mutually exclusive investment projects. Project A requires an initial outlay of $500 and will return $120 per year for the next seven years. Project B requires an initial outlay of $5,000 and will return $1,350 per year for the next five years. The required rate of return is 10%. Use th Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a b с 1.1684 1.2973 1.3476 d 1.4786
Lipsion Ltd company is thinking about investing in one of two potential new productsfor sale. The projections are as follows: year revenue/ product s revenue/ product v0 (150,000) outlay (150000) outlay1 14000 150002 24000 253333 44000 520004 84000 63333 Calculate NPV of both products (to 1 d.p.) assuming a discount rate of 7%. Then decide which product should be selected and why ?
Consider a project with an initial investment (today, t = 0) of $200,975. This project will generate cash flows of $49,500 per year for the next 8 years, at which time (end of Year 8) the company will pay $50,000 to another for clean-up and disposal. What is the Profitability Index (PI) of the project if shareholders demand a 16.295% return? Answer with a number rounded to three decimal places, e.g., 4.0877% should be entered as 4.088.
Whispering Winds Company is considering an investment which will return a lump sum of $2,590,000 six years from now. What amount should Whispering Winds Company pay for this investment to earn an 11% return? (For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round answer to O decimal places, e.g. 5,275.) Click here to view the factor table. Amount pay for investment $
#3 Caspian Sea Drinks is considering buying the J-Mix 2000. It will allow them to make and sell more product. The machine cost $1.63 million and create incremental cash flows of $645,995.00 each year for the next five years. The cost of capital is 10.09%. What is the profitability index for the J-Mix 2000? Answer format: Number: Round to: 3 decimal places.
Price Mart is considering outsourcing its billing operations. A consultant estimates that outsourcing should result in cash savings of $9,100 the first year, $15,100 for the next two years, and $18,100 for the next two years. Interest is at 10%. Assume cash flows occur at the end of the year. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required:Calculate the total present value of the cash flows.
A firm in New York has USD 40 000 to invest in three projects, either Project A or Project Bor Project C. Each project runs over four years. The expected cash inflows at the end of eachyear are displayed in the table The required rate of return (discount rate) is 10% p.a.What conclusions can you draw? Are the projects equally profitable? Use the profitability index(PI).

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