Really need help, please 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 $1.89 million and create incremental cash flows of $567,368.00 each year for the next five years. The cost of capital is 8.11%. What is the profitability index for the J-Mix 2000?"
Profitability index is calculated using the below formula:
Profitability Index= NPV + Initial investment/ Initial investment
Net present value can be calculated using a financial calculator by inputting the below:
The net present value is $368,783.4493
Profitability Index= $368,783.4493 + $1,890,000/ $1,890,000
= $2,225,783.449/ $1,890,000
= 1.195.
In case of any query, kindly comment on the solution.
Really need help, please round to 3 decimal places "Caspian Sea Drinks is considering buying the...
really need help, 3 decimal places please Caspian Sea Drinks is considering buying the J-Mix 2000. It will allow them to make and sell more product. The machine cost $1.52 million and create incremental cash flows of $597,672.00 each year for the next five years. The cost of capital is 11.54%. What is the profitability index for the J-Mix 2000? Submit
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