D. net present value (NPV)
the above is answer..
NPV is best because it tells net addition of value and higher the net value, then it would be easier to select based on the value addition
Q11 ID: 9.4-3 11. You are trying to decide between three mutually exclusive investment opportunities. The...
10. You are trying to decide between three mutually exclusive investment opportunities. The most appropriate tool for identifying the correct decision is: A. IRR. B. incremental IRR. C. profitability index. D. NPV.
The Matterhorn Corporation is trying to choose between the following two mutually exclusive design projects: Year Cash Flow (I) Cash Flow (II) 0 –$ 88,000 –$ 56,000 1 37,900 11,400 2 48,000 35,500 3 28,000 29,500 a. If the required return is 11 percent, what is the profitability index for each project? Profitability index Project I Project II If the required return is 11 percent and the company applies the profitability index decision rule, which project should the firm accept...
The Whenworth Corporation is trying to choose between the following two mutually exclusive design projects: Year Cash Flow (I) Cash Flow (II) 0 –$85,000 –$51,000 1 34,900 12,300 2 45,000 32,500 3 28,000 23,500 a-1. If the required return is 10 percent, what is the profitability index for each project? a-2. If the company applies the profitability index decision rule, which project should it take? b-1. If the required return is 10 percent, what is the NPV for each project?...
The Matterhom Corporation is trying to choose between the following two mutually exclusive design projects: Cash Flow (II) -$24,000 8,000 14,500 12,800 Cash Flow (I) -$65,000 24,000 29,000 36,000 Year Requirement 1: (a) If the required return is 11 percent, 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 Project Il (b) If the required return is 11 percent and the company applies the...
If a company must choose between two mutually exclusive investment projects, the best general method to employ for decision-making purposes is: Cash-flow bailout Cash-flow break-even Net Present value (NPV) Discounted payback Accounting (book) rate of return, based on average investment over the life of each project The profitability index (PI) is calculated as: Net present value (NPV) divided by average investment New present value (NPV) divided by initial investment Average investment divided by net present value (NPV) Initial investment divided...
The Whenworth Corporation is trying to choose between the following two mutually exclusive design projects: Year O WN-O Cash Flow (1) Cash Flow (II) $77,000 $35,000 29,500 11,500 37,000 24,500 43,000 18,500 a-1. If the required return is 12 percent, 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.) a-2. If the company applies the profitability index decision rule, which project should it take? b-1. If...
The Whenworth Corporation is trying to choose between the following two mutually exclusive design projects: Year 0 Cash Flow (1) Cash Flow (II) -$86,000 $53,000 35,900 12,000 46,000 33,500 26,000 24,500 WN a-1. If the required return is 10 percent, what is the profitability index for each project? (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.) a-2. If the company applies the profitability index decision rule, which project should it take? b-1. If...
Cori's Sausage Corporation is trying to choose between the following two mutually exclusive design projects: Year Cash Flow (I) Cash Flow (II) 0 –$ 49,000 –$ 23,800 1 24,400 12,900 2 24,400 12,900 3 24,400 12,900 a-1. If the required return is 10 percent, 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.) a-2. If the company applies the profitability index decision rule, which...
Cori's Sausage Corporation is trying to choose between the following two mutually exclusive design projects: Year Cash Flow (I) Cash Flow (II) 0 – $ 67,000 – $ 17,700 1 28,000 9,550 2 28,000 9,550 3 28,000 9,550 a-1. If the required return is 11 percent, 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 I Project II a-2. If the...
The Sloan Corporation is trying to choose between the following two mutually exclusive design projects: Year Cash Flow (I) Cash Flow (II) 0 –$ 70,000 –$ 17,400 1 31,500 9,400 2 31,500 9,400 3 31,500 9,400 a-1 If the required return is 11 percent, what is the profitability index for both projects? (Do not round intermediate calculations. Round your answers to 3 decimal places, e.g., 32.161.) a-2 If the company applies the profitability index decision rule, which project...