Profitability index and NPV
The two projects below are possible investments. You require a return of 12%.
| Year | Project A | Project B |
| 0 | -$31,000 | -$60,000 |
| 1 | 14,000 | 24,000 |
| 2 | 12,400 | 23,000 |
| 3 | 14,800 | 22,000 |
| 4 | 10,400 | 21,000 |
Find the probability index and NPV of Project A and Project B
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The two projects below are possible investments. You require a return of 12%.
The two projects below are possible investments. You require a return of 12%.YearProject YProject Z0-$31,000-$60,000114,00024,000212,40023,000314,80022,000410,40021,000The profitability index for project Y is____, for project Z is_____The NPV for project Y is____,for project Z is_____Based on the above calculations, project ____ should be accepted.
Dehlia Manufacturing has the following two possible projects. The required return is 12 percent. Year Project...
Dehlia Manufacturing has the following two possible projects. The required return is 12 percent. Year Project Y Project Z 0 ($31,000) ($60,000) Req Return 12% 1 $14,000 $24,000 2 $12,400 $23,000 3 $14,800 $22,000 4 $10,400 $21,000 a.What is the profitability index for each project? b. What is the NPV for each project? c.Which, if either, of the projects should the company accept?
Dahlia Manufacturing has the following two possible projects. The required return is 12 percent. Year Project...
Dahlia Manufacturing has the following two possible projects. The required return is 12 percent. Year Project Y Project Z 0 –$31,000 –$60,000 1 14,000 24,000 2 12,400 23,000 3 14,800 22,000 4 10,400 21,000 Required: (a) What is the profitability index for each project? (Do not round intermediate calculations. Round your answers to 3 decimal places (e.g., 32.161).) Profitability index Project Y Project Z (b) What is the NPV for each project? (Do not round intermediate calculations. Round your answers...
Exercise 11-10 NPV and profitability index LO P3 Following is information on two alternative investments being...
Exercise 11-10 NPV and profitability index LO P3 Following is information on two alternative investments being considered by Jolee Company. The company requires a 10% return from its investments PV of $1. FV of $1. PVA of $1. and EVA of $1 (Use appropriate factor(s) from the tables provided.) Initial Investment Expected net cash flows in: Project A $(175,325) Project $(144,960) 38,000 48,000 86,295 78,400 60.000 27,000 . 49.00 56,00 a. For each alternative project compute the net present value...
Probability index
You are asked to evaluate the following two projects for Boring Corporation. Use a discount rate of 12 percent. Use Appendix B. Project X (DVDsof the Weather Reports)($48,000 Investment)Project Y (Slow-MotionReplays of Commercials)($68,000 Investment)Year Cash FlowYearCash Flow1$24,0001$34,000222,000227,000323,000328,000422,600430,000 a. Calculate the profitability index for project X. (Round "PV Factor" to 3 decimal places. Round the final answer to 2 decimal places.) PI b. Calculate the profitability index for project Y. (Round "PV Factor" to 3 decimal places. Round the final answer to 2 decimal places.) PI c. Using the...
Exercise 24-10 NPV and profitability index LO P3 Following is information on two alternative investments being...
Exercise 24-10 NPV and profitability index LO P3 Following is information on two alternative investments being considered by Jolee Company. The company requires a 12% retur from its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Project A $(180,325) Project B $(145,960) Initial investment Expected net cash flows in year: Hm #on 47,000 57,900 81,295 77,400 69,000 37,000 60,000 49,000 74,000 32,000 a. For each alternative project...
1. Given the following set of cash flows for a project, calculate the NPV, PI, IRR,...
1. Given the following set of cash flows for a project, calculate the NPV, PI, IRR, MIRR, Payback, Discounted Payback and Accounting Rate of Return. Assume a cost of capital of 10%. Assuming that this is an independent project, should the project be accepted? Why or why not? (20 pts.) Year Cash Flow Net Profit Depreciation 0 -$125,000 1 $22,000 $15,000 $10,000 2 $58,000 $43,000 $25,000 3 -$30,000 $24,000 $21,000 4 $35,000 $28,000 $18,000 5 $28,000 $20,000 $15,000 6 $60,000 ...
A firm evaluates all of its projects by using the NPV decision rule. Year Cash Flow 0 –$27,000 1 22,000 2 14,000 3 7,000...
A firm evaluates all of its projects by using the NPV decision rule. Year Cash Flow 0 –$27,000 1 22,000 2 14,000 3 7,000 a. At a required return of 28 percent, what is the NPV for this project? b. At a required return of 39 percent, what is the NPV for this project?
Robben Manufacturing has the following two possible projects. The required return is 11 percent. Year Project...
Robben Manufacturing has the following two possible projects. The required return is 11 percent. Year Project Y Project Z 0 27,200 52.000 21,000 23,000 19,000 21,000 13,200 11,600 14.000 9.600 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.) Profitability index Project Y Project Z b. What is the NPV for each project? (Do not round intermediate calculations and round your answers to 2 decimal...
5. Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) -$300,000...
5. Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) -$300,000 -$40,000 $10,000 $17,000 $60,000 $14,000 $60,000 $20,000 $400,000 $10,500 You require a 15% return on both investments. a. What is the payback period of each of the project? (6 points) b. What is the discounted payback period of each of the project? (6 points) c. What is the NPV of each of the project? (6 points) d. What is the profitability index (PI) of...
Exercise 11-10 NPV and profitability index LO P3 Following is information on two alternative investments being considered by Jolee Company. The company requires a 10% return from its investments PV of $1. FV of $1. PVA of $1. and EVA of $1 (Use appropriate factor(s) from the tables provided.) Initial Investment Expected net cash flows in: Project A $(175,325) Project $(144,960) 38,000 48,000 86,295 78,400 60.000 27,000 . 49.00 56,00 a. For each alternative project compute the net present value...
Exercise 24-10 NPV and profitability index LO P3 Following is information on two alternative investments being considered by Jolee Company. The company requires a 12% retur from its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Project A $(180,325) Project B $(145,960) Initial investment Expected net cash flows in year: Hm #on 47,000 57,900 81,295 77,400 69,000 37,000 60,000 49,000 74,000 32,000 a. For each alternative project...
Robben Manufacturing has the following two possible projects. The required return is 11 percent. Year Project Y Project Z 0 27,200 52.000 21,000 23,000 19,000 21,000 13,200 11,600 14.000 9.600 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.) Profitability index Project Y Project Z b. What is the NPV for each project? (Do not round intermediate calculations and round your answers to 2 decimal...
5. Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) -$300,000 -$40,000 $10,000 $17,000 $60,000 $14,000 $60,000 $20,000 $400,000 $10,500 You require a 15% return on both investments. a. What is the payback period of each of the project? (6 points) b. What is the discounted payback period of each of the project? (6 points) c. What is the NPV of each of the project? (6 points) d. What is the profitability index (PI) of...
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