Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Rosewill Inc., is contemplating an electric Food Drying project which is expected to last for 9 years. Using the profitability index rule, what is the lowest annuity cash flow necessary to approve the Food Drying project if it involves an outlay of $95,200 today? Note: Rosewill’s required return is 8.5%.

a. $14,361.17

b. $10,577.78

c. $18,386.65

d. $15,557.94

e. $16,972.30

Expert Solution
Check Mark
Step 1

PI = Present value of future cashflow / Initial investment

For approval PI should be atleast 1 

 

 

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