The profitability index reflects the value created per dollar: a. invested. b. of sales. c. of...
The profitability index reflects the value created per dollar: a. invested. b. of sales. c. of net income. d. of taxable income. e. of shareholders' equity.
Homework Answers
Correct Answer is a. Invested
Profitability Index of a project is “the ratio of the present value of future net cash inflows to the present value of cash outflows”
Mathematically, Profitability Index = Present Value of Cash Inflows / Invested Amount
Hence, Profitability Index reflects the value created per dollar invested..
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The profitability index reflects the value created per dollar:
a. invested. b. of sales. c. of...
11) Which of the following statements is FALSE? A) The profitability index measures the value created...
11) Which of the following statements is FALSE? A) The profitability index measures the value created in terms of NPV per unit of resource consumed. B) The profitability index is the ratio of value created to resources consumed. C) The profitability index can can be easily adapted for determining the correct investment decisions when multiple resource constraints exist. D) The profitability index measures the "bang for your buck."
A value-weighted index consisting of stocks A, B, and C was created yesterday. When the index...
A value-weighted index consisting of stocks A, B, and C was created yesterday. When the index was created, stocks A,B, and C traded for $80, $45, and $125, respectively. The number of shares outstanding for A,B, and C, was 500, 900, and 600 when the index was formed. Today, stocks A, B, and C trade for $65, $50, and $145, respectively. Find the return on the index from yesterday to today Round intermediate steps and your final answer to four...
A value-weighted index consisting of stocks A, B, and C was created yesterday. When the index...
A value-weighted index consisting of stocks A, B, and C was created yesterday. When the index was created, stocks A,B, and C traded for $80, $45, and $125, respectively. The number of shares outstanding for A,B, and C, was 500, 900, and 600 when the index was formed. Today, stocks A, B, and C trade for $65, $50, and $145, respectively. Find the return on the index from yesterday to today. Round intermediate steps and your final answer to four...
Net present value and Profitability Index of each Project
Following is information on two alternative investments being considered by Tiger Co. The company requires an 8% return from its investments. FV of $1, PVA of SI and FVA of SJ (use appropriate factor(s) from the tables provided.)
49, see
Initial investment
Expected net cash f lows in:
Year I
Year 2
Year 3
Project XI
$ (108, aøe)
39 , aøe
74, see
Project X2
81,øeø
71,øeø
61,øeo
a. Compute each project's net present value.
b. Compute each project's...
Exercise 24-12 Net present value, profitability index LO P3 Following is information on two alternative investments...
Exercise 24-12 Net present value, profitability index LO P3 Following is information on two alternative investments being considered by Tiger Co. The company requires an 8% return 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 x1 Project x2 Initial investment $(108,000) $(176,000) Expected net cash flows in year: 39,000 81,000 49,500 71,000 74,500 61,000 1 2 3 a. Compute each project's net present value....
Return on common equity measures profitability per dollar of investment for: a. short-term suppliers of funds...
Return on common equity measures profitability per dollar of investment for: a. short-term suppliers of funds b. all suppliers of funds c. common stockholders d. all stockholders e. long-term suppliers of funds
Exercise 24-12 Net present value, profitability index LO P3 Following is information on two alternative investments...
Exercise 24-12 Net present value, profitability index LO P3 Following is information on two alternative investments being considered by Tiger Co. The company requires an 8% return 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 x1 Project x2 Initial investment $(108,000) $(176,000) Expected net cash flows in year: 39,000 81,000 49,500 71,000 74,500 61,000 1 2 3 a. Compute each project's net present value....
1 More Info Requirement 1. Compute the payback, the ARR, the NPV, and the profitability index...
1 More Info Requirement 1. Compute the payback, the ARR, the NPV, and the profitability index of these two plans Calculate the payback for both plans. (Round your answers to one decimal place, XX) Amount invested Expected not cash flow Plan 5450000 1525000 Plan B 8150000 11100000 . The company is considering the possible o n Pan would ghtmarshops at a cost of $8.450 000 E u o 51525.000 for 10 year with ori e nd of years. Under Pan...
D. Calculate the profitability index. What is the net present value of a project with a...
D. Calculate the profitability index. What is the net present value of a project with a cost of $100 000 that generates cash flows of $40000 over the next three years, and the required A. $8670 B. $8670 C. $7890 $5210 51 What is the approximate internal rate of return of a project with a cost of $100000 that generates cash flows of $40 000 over the next three ycars? A. 296 B. 5% C.9% D. 1096
11. Profitability index Aa Aa E Estimating the cash flow generated by $1 invested in a...
11. Profitability index Aa Aa E Estimating the cash flow generated by $1 invested in a project The profitability index (PI) is a capital budgeting tool that is defined as the present value of a project's cash inflows divided by the absolute value of its initial cash outflow. Consider this case: Purple Whale Foodstuffs is considering investing $2,750,000 in a project that is expected to generate the following net cash flows: Year Year 1 Year 2 Year 3 Year 4...
A value-weighted index consisting of stocks A, B, and C was created yesterday. When the index was created, stocks A,B, and C traded for $80, $45, and $125, respectively. The number of shares outstanding for A,B, and C, was 500, 900, and 600 when the index was formed. Today, stocks A, B, and C trade for $65, $50, and $145, respectively. Find the return on the index from yesterday to today Round intermediate steps and your final answer to four...
Exercise 24-12 Net present value, profitability index LO P3 Following is information on two alternative investments being considered by Tiger Co. The company requires an 8% return 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 x1 Project x2 Initial investment $(108,000) $(176,000) Expected net cash flows in year: 39,000 81,000 49,500 71,000 74,500 61,000 1 2 3 a. Compute each project's net present value....
Exercise 24-12 Net present value, profitability index LO P3 Following is information on two alternative investments being considered by Tiger Co. The company requires an 8% return 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 x1 Project x2 Initial investment $(108,000) $(176,000) Expected net cash flows in year: 39,000 81,000 49,500 71,000 74,500 61,000 1 2 3 a. Compute each project's net present value....
1 More Info Requirement 1. Compute the payback, the ARR, the NPV, and the profitability index of these two plans Calculate the payback for both plans. (Round your answers to one decimal place, XX) Amount invested Expected not cash flow Plan 5450000 1525000 Plan B 8150000 11100000 . The company is considering the possible o n Pan would ghtmarshops at a cost of $8.450 000 E u o 51525.000 for 10 year with ori e nd of years. Under Pan...
D. Calculate the profitability index. What is the net present value of a project with a cost of $100 000 that generates cash flows of $40000 over the next three years, and the required A. $8670 B. $8670 C. $7890 $5210 51 What is the approximate internal rate of return of a project with a cost of $100000 that generates cash flows of $40 000 over the next three ycars? A. 296 B. 5% C.9% D. 1096
11. Profitability index Aa Aa E Estimating the cash flow generated by $1 invested in a project The profitability index (PI) is a capital budgeting tool that is defined as the present value of a project's cash inflows divided by the absolute value of its initial cash outflow. Consider this case: Purple Whale Foodstuffs is considering investing $2,750,000 in a project that is expected to generate the following net cash flows: Year Year 1 Year 2 Year 3 Year 4...
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