The Michner Corporation is trying to choose between the following two mutually exclusive design projects: Year Cash Flow (I) 0 -$ 82,000 1 37,600 2 37,600 37,600 Cash Flow (II) -$ 21,700 11, 200 11,200 11, 200 a-1. If the required return is 10 percent, what is the profitability index for each project? Note: Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161. a-2. If the required return is 10 percent and the company applies the profitability index decision rule, which project should the firm accept? b-1. If the required return is 10 percent, what is the NPV for each project? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. b-2. If the company applies the NPV decision rule, which project should it take? a-1. Project I Project II a-2. Project acceptance b-1. Project I Project II b-2. Project acceptance

The Michner Corporation is trying to choose between the following two mutually exclusive design projects: Year Cash Flow (I) 0 -$ 82,000 1 37,600 2 37,600 37,600 Cash Flow (II) -$ 21,700 11, 200 11,200 11, 200 a-1. If the required return is 10 percent, what is the profitability index for each project? Note: Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161. a-2. If the required return is 10 percent and the company applies the profitability index decision rule, which project should the firm accept? b-1. If the required return is 10 percent, what is the NPV for each project? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. b-2. If the company applies the NPV decision rule, which project should it take? a-1. Project I Project II a-2. Project acceptance b-1. Project I Project II b-2. Project acceptance

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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The Michner Corporation is trying to choose between the following two mutually exclusive design projects: Year Cash Flow (I) Cash Flow (II) 0 -$ 76,000 -$ 34,000 1 29,000 11,000 23,500 17,500 2 3 36,000 42,000 a-1. If the required return is 12 percent, what is the profitability index for each project? Note: Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161. a-2. If the company applies the profitability index decision rule, which project should it take? b-1. If the required return is 12 percent, what is the NPV for each project? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. b-2. If the company applies the net present value decision rule, which project should it take? a-1. Project I a-2. Project II b-1. Project I b-2. Project II
The Michner Corporation is trying to choose between the following two mutually exclusive design projects: S Year Cash Flow (I) Cash Flow (II) 0 -$ 84,000 -$ 42,000 1 33,900 12,600 2 3 31,500 25,500 44,000 50,000 a-1. If the required return is 17 percent, what is the profitability index for each project? Note: Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161. a-2. If the company applies the profitability index decision rule, which project should it take? b-1. If the required return is 17 percent, what is the NPV for each project? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. b-2. If the company applies the net present value decision rule, which project should it take? a-1. Project I a-2. Project II b-1. Project I Project II b-2. Project II Project I
The Michner Corporation is trying to choose between the following two mutually exclusive design projects: Cash Flow (II) -$ 51,000 12,300 32,500 23,500 Year 0 1 2 3 Cash Flow (I) -$ 85,000 34,900 45,000 28,000 a-1. If the required return is 10 percent, what is the profitability index for each project? Note: Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161. a-2. If the company applies the profitability index decision rule, which project should it take? b-1. If the required return is 10 percent, what is the NPV for each project? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. b-2. If the company applies the net present value decision rule, which project should it take? a-1. Project I Project II a-2. b-1. Project I Project II b-2. Answer is not complete. Project II Project I 1.058
The Michner Corporation is trying to choose between the following two mutually exclusive design projects: Year Cash Flow (1) Cash Flow (II) 0 123 -$ 73,000 33,000 33,000 3 33,000 -$ 17,100 9,250 9,250 9,250 a-1.If the required return is 11 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.) Project I Project II - If the company applies the profitability index decision rule, which project should the 2. firm accept? O Project I O Project II b- What is the NPV for both projects? (A negative answer should be indicated by a 1. minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Project I Project II
The Whenworth Corporation is trying to choose between the following two mutually exclusive design projects: Year Cash Flow (I) Cash Flow (II) -$87,000 36,900 47,000 27,000 -$55,000 11,700 34,500 28,500 1 3 a-1. If the required return is 10 percent, what is the profitability index for each project? (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.) a-2. If the company applies the profitability index decision rule, which project should it take? b-1. If the required return is 10 percent, what is the NPV for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b-2. If the company applies the net present value decision rule, which project should it take? a-1. Project I Project II а-2. b-1. Project I Project II b-2.
The Sloan Corporation is trying to choose between the following two mutually exclusive design projects: Year Cash Flow(I) Cash Flow(II) 0 –$ 55,000 –$ 18,900 1 25,000 10,150 2 25,000 10,150 3 25,000 10,150 a-1 If the required return is 10 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.) a-2 If the company applies the profitability index decision rule, which project should the firm accept? Project I Project Il b-1 What is the NPV for both projects? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b-2 If the company applies the NPV decision rule, which project should it take? Project I Project II
The Michner Corporation is trying to choose between the following two mutually exclusive design projects: Year Cash Flow (1) Cash Flow (II) -$ -$ 0 55,000 1 25,000 2 25,000 3 25,000 a-1. If the required return 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.) Project I Project II 18,900 10,150 10,150 10,150 a- If the company applies the profitability index decision rule, which project should the 2. firm accept? Project I O Project II Project I Project II 1. b- What is the NPV for both projects? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
Coore Manufacturing has the following two possible projects. The required return is 10 percent. Project Y -$ 27,900 13,900 Project Z -$ 59,000 17,500 12,300 30,000 14,700 10,300 Year 0 1 2 3 4 15,500 28,000 a. What is the profitability index for each project? Note: Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 3- b. What is the NPV for each project? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 3. c. Which, if either, of the projects should the company accept? a. Project Y Project Z b. Project Y Project Z c. Accept project
es The Michner Corporation is trying to choose between the following two mutually exclusive design projects: Year Cash Flow (1) Cash Flow (II) -$ 0 1 2 3 Project I Project II 67,000 30,500 30,500 30,500 a-1.If the required return is 11 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.) a. If the company applies the profitability index decision rule, which project should the 2. firm accept? Project I Project II 17,700 9,550 9,550 9.550 O Project I O Project II b- What is the NPV for both projects? (A negative answer should be Indicated by a 1. minus sign. Do not round Intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b- If the company applies the NPV decision rule, which project should it take? 2. O Project I O Project II
Coore Manufacturing has the following two possible projects. The required return is 12 percent. Year Project Y Project Z 0 -$27,500 -$55,000 1 13,500 19,500 234 2 11,900 26,000 3 14,300 17,500 9,900 24,000 a. 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. What is the NPV for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) c. Which, if either, of the projects should the company accept? a. Project Y Project Z 1.38 ง b. Project Y 3 decimal places required. Project Z c. Accept project x
What is the profitability index of a project that costs $10,000 and provides cash flows of $3,200 in years 1 and 2 and $5,200 in years 3 and 4? The discount rate is 8%. Note: Do not round intermediate calculations. Round your answer to 4 decimal places. Answer is complete but not entirely correct. Profitability index 1.3657 x
Crane Company is considering three long-term capital investment proposals. Each investment has a useful life of 5 years. Relevant data on each project are as follows. Project Bono Project Edge Project Clayton Capital investment $164,000 $180,500 $204,000 Annual net income: Year 1 14,420 18,540 27,810 2 14,420 17,510 23,690 3 14,420 16,480 21,630 4 14,420 12,360 13,390 5 14,420 9,270 12,360 Total $72,100 $74,160 $98,880 Depreciation is computed by the straight-line method with no salvage value. The company's cost of capital is 15%. (Assume that cash flows occur evenly throughout the year.)

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