years, after which he plans to scrap the equipment and retire to the beaches of Nevis....
please slove step by step
8. Calculating Profitability Index Suppose the following two independent investment opportunities are available to Fitz, Inc. The appropriate discount rate is 8.5 percent. Project Alpha Project Beta Year OHN -$2,700 1,500 1,300 1,100 -$4,100 900 2,600 3,200 a. Compute the profitability index for each of the two projects. b. Which project(s) should the company accept based on the profitability index rule?
7. Calculating Profitability Index store expects aftertax cash inflows of $59,000 annually for seven years, after which he plans to scrap the equipment and retire to the beaches of Nevis. The first cash inflow occurs at the end of the first year. Assume the required return is 13 percent. What is the project's PI? Should it be accepted? Bill plans to open a self-serve grooming center in a front. The grooming equipment will cost $265,000, to be paid immediately. Bill
Bill plans to open a self-serve grooming center in a storefront. The grooming equipment will cost $450,000. Bill expects aftertax cash inflows of $97,000 annually for seven years, after which he plans to scrap the equipment and retire to the beaches of Nevis. The first cash inflow occurs at the end of the first year. Assume the required return is 12 percent. What is the project’s profitability index (PI)?