Problem 9-16 Problems with Profitability Index [LO1, 7]The Michner Corporation is trying to choose between the following two mutuallyexclusive design projects:Vear Cash Flow (0) Cash Flow (-2463,00032,00032,00032,000-$18,1009,7509,7509,7503a-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 decimalplaces, e.g., 32.161.)Project IProject I|a- If the company applies the profitability index decision rule, which project should the2. firm accept?O ProjectIO Project Ib- What is the NPV for both projects? (A negative answer should be indicated by a1. minus sign. Do not round Intermediate calculations and round your answers to 2decimal places, e.g., 32.16.)Project iProject Ib-if the company applies the NPV decision rule, which project should it take?2.Project IO Project I

Profitability index is the ratio of the present value of cash flow to the initial investment and…

The Michner Corporation is trying to choose between the following two mutually exclusive design projects: Year Cash Flow () Cash Flow ( -$ 63,000 32,000 32,000 32,000 -$ 18,100 9,750 9,750 9,750 3. -1.f 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

The Michner Corporation is trying to choose between the following two mutually exclusive design projects: Year Cash Flow () Cash Flow ( -$ 63,000 32,000 32,000 32,000 -$ 18,100 9,750 9,750 9,750 3. -1.f 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

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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(c) Compute the annual rate of return for each project. (Hint: Use average annual net income in your computation.) (Round answers to 2 decimal places, e.g. 10.50%.) Annual rate of return Project Bono % Project Edge % Project Clayton %
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Emusk Inc. is evaluating two mutually exclusive projects. The required rate of return on these projects is 8%. Calculate the profitability index for project A. (Round to 3 decimals) Year 0 1 2 3 4 5 Project A -15,000,000 2,000,000 3,000,000 5,000,000 5,000,000 6,000,000 Project B -15,000,000 6,000,000 6,000,000 6,000,000 1,000,000 1,000,000
BATA plc. is considering the following two projects. Only one of which maybe selected. Each project has a required rate of return of 15% for A and 10% for B with the following cash flowsYear Project A Project B0 K (200,000) K (175,000)1 68,700 50,0002 44,500 60,2503 56,500 45,2504 35,500 80,250Required:A. Calculate for each project:Payback period for each of the projects, Net present value for each of the projects and Internal rate of return for each of the projectsB. Explain which project you would recommend for acceptance for each of the three methods and overall. C. Briefly discuss the relative merits of the pay back and net present value methods of evaluation methods mentioned in (a) above
A project that costs $2,300 to install will provide annual cash flows of $730 for each of the next 5 years. a. Calculate the NPV if the opportunity cost of capital is 12%? (Do not round intermediate calculations. Round your answer to 2 decimal places.) NPV b. Is this project worth pursuing? Yes O No c. What is the project's internal rate of return IRR? (Do not round intermediate calculations. Round your answer to 2 decimal places.) %24
Compute the NPV for Project M if the appropriate cost of capital is 8 percent. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 2 decimal places.) Project M Time: 0 1 2 3 4 5 Cash flow: −$3,100 $710 $840 $880 $960 $460 Should the project be accepted or rejected?multiple choice rejected accepted
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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
Just need b-1, d-1, and e-1 answered.
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