What does the project profitability index measure, and how is it calculated?
What does the project profitability index measure, and how is it calculated?
Homework Answers
The profitability index measures the ratio of present value of cash inflows to the cost involved. An index greater than 1 implies that the project is profitable and an index lower than 1 implies that it is unprofitable. It is computed as PV of Cash inflows/Initial cost.
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What does the project profitability index measure, and how is it
calculated?
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1) Discuss the CPI, what it measures, and how it is calculated. a) How does the BLS calculate an index of the average person's spending habits? b) How do they track the price changes? c) What is the Producer Price Index?
1) Discuss the CPI, what it measures, and how it is calculated. a) How does the BLS calculate an index of the average person's spending habits? b) How do they track the price changes? c) What is the Producer...
What is the Profitability Index of a project that costs $41,000 today and is expected to...
What is the Profitability Index of a project that costs $41,000 today and is expected to generate annual cash inflows of $5,000 for the following 10 years. Assume the company's WACC is 9%. Round to two decimal places.
What is the Profitability Index of a project that costs $46,000 today and is expected to...
What is the Profitability Index of a project that costs $46,000 today and is expected to generate annual cash inflows of $4,000 for the following 11 years. Assume the company's WACC is 8%. Round to two decimal places.
What is the profitability index of a normal project that has an initial cost of $3,284,390...
What is the profitability index of a normal project that has an initial cost of $3,284,390 (i.e., CF0 = - 3283390) and an NPV of $1,935,830? Assume that this project has an expected rate of return (i.e., the project’s cost of capital) of 16.0% and an IRR of 23.2%.
What is the Profitability Index of a project that costs $30,000 today and is expected to...
What is the Profitability Index of a project that costs $30,000 today and is expected to generate annual cash inflows of $6,000 for the following 5 years. Assume the company's WACC is 11%. Round to two decimal places. 942.99
What is the profitability index for this proposed project if the required rate of return is...
What is the profitability index for this proposed project if the required rate of return is 12%? Year om Cash Flows -1,000,000 300,000 500,000 300,000 700,000 4 01.16 1.13 O 1.22 01.25 1.32
What is the profitability index for a project that has an initial cost of $7,700 and...
What is the profitability index for a project that has an initial cost of $7,700 and cash inflows of $850, $400, $3,300, and $7,100 over the next four years, respectively, if the required rate of return is 15%. 1.055 0.894 1.944 0.944 0.055
(2 of 10) What is the profitability index for this proposed project if the required rate...
(2 of 10) What is the profitability index for this proposed project if the required rate of return is 13%? Year Cash Flows -1,000,000 300,000 400,000 300,000 700,000 NO 1.16 1.13 1.22 1.25 1.32
(4 of 10) What is the profitability index for this proposed project if the required rate...
(4 of 10) What is the profitability index for this proposed project if the required rate of return is 12%? Year Cash Flows -1,000,000 300,000 400,000 300,000 700,000 + 1.16 1.13 1.22 1.25 1.32
What is the Profitability Index for a project with the following cash flows, at 4.0% Cost...
What is the Profitability Index for a project with the following cash flows, at 4.0% Cost Returns 0 1 2 3 4 ($10,000) $4.500 $3,250 $3,000 $1,000 0.987 1.035 1.061 1.085
1) Discuss the CPI, what it measures, and how it is calculated. a) How does the BLS calculate an index of the average person's spending habits? b) How do they track the price changes? c) What is the Producer Price Index?
1) Discuss the CPI, what it measures, and how it is calculated. a) How does the BLS calculate an index of the average person's spending habits? b) How do they track the price changes? c) What is the Producer...
What is the Profitability Index of a project that costs $30,000 today and is expected to generate annual cash inflows of $6,000 for the following 5 years. Assume the company's WACC is 11%. Round to two decimal places. 942.99
What is the profitability index for this proposed project if the required rate of return is 12%? Year om Cash Flows -1,000,000 300,000 500,000 300,000 700,000 4 01.16 1.13 O 1.22 01.25 1.32
What is the profitability index for a project that has an initial cost of $7,700 and cash inflows of $850, $400, $3,300, and $7,100 over the next four years, respectively, if the required rate of return is 15%. 1.055 0.894 1.944 0.944 0.055
(2 of 10) What is the profitability index for this proposed project if the required rate of return is 13%? Year Cash Flows -1,000,000 300,000 400,000 300,000 700,000 NO 1.16 1.13 1.22 1.25 1.32
(4 of 10) What is the profitability index for this proposed project if the required rate of return is 12%? Year Cash Flows -1,000,000 300,000 400,000 300,000 700,000 + 1.16 1.13 1.22 1.25 1.32
What is the Profitability Index for a project with the following cash flows, at 4.0% Cost Returns 0 1 2 3 4 ($10,000) $4.500 $3,250 $3,000 $1,000 0.987 1.035 1.061 1.085
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