The project profitability index is used to compare the internal rates of return of two companies with different investment amounts.
true or false?
Profitability index is calculated to compare the projects and choose one among them when projects require equal investments to be made.
FALSE.
The project profitability index is used to compare the internal rates of return of two companies...
A project with an initial investment of $74000 and a profitability index of 1.239 also has an internal rate of return of 12%. The present value of net cash flows is O $74000. O $59726. $91686. $82880.
A project with an initial investment of $90,000 and a profitability index of 1.510 also has an internal rate of return of 10%. The present value of the net cash flows is:
Compare and analyze ratios of two companies. Profitability ratios Dec 31, 2018 Return on Sales Gross profit margin Operating profit margin 63.05% 27.31% 20.20% Net profit margin Return on Investment Return on equity (ROE) Return on assets (ROA) 37.89% 7.73% Dec 29, 2018 Return on Sales 54.56% Gross profit margin Operating profit margin Net profit margin 15.64% 19.35% Return on Investment Return on equity (ROE) 86.20% Return on assets (ROA) 16.12%
The internal rate of return is defined as the: A. discount rate that causes the profitability index for a project to equal zero. B. discount rate which equates the net present value of cash inflows to the net present value of cash outflows to zero. C. maximum rate of return a firm expects to earn on a project. D. rate of return a project will generate if the project in financed solely with internal funds.
QS 24-10 Profitability index LO P3 Yokam Company is considering two aternative projects. Project requires an initial Investment of $490,000 and has a present value of cash flows of $2.250.000. Project 2 requires an initial Investment of $4 million and has a present value of cash flows of $7 m lon. 1. Compute the profitability Index for each project. Profitability Index Choose Numerator: Choose Profitability Index Profitability index Project Project 2. Based on the profitability Index, which project should the...
The internal rate of return is defined as the: O Discount rate that causes the profitability index for a project to equal zero. O Rate of return a project will generate if the project in financed solely with internal funds. O Discount rate that equates the net cash inflows of a project to zero. O Maximum rate of return a firm expects to earn on a project. O Discount rate which causes the net present value of a project to...
If a project costing $40000 has a profitability index of 1 and the discount rate was 15%, then the project’s internal rate of return was less than 15%. equal to 15%. greater than 15%. undeterminable.
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
Which one of the following indicates that a project is definitely acceptable? A. Profitability index greater than 1.0 B. Negative net present value C. Modified internal rate return that is lower than the requirement D. Zero internal rate of return E. Positive average accounting return
Compute net present value, profitability C index, and internal rate of return. P12.3A (LO 2, 3, 4), AN Service Brooks Clinic is considering investing in new heart-monitoring equipment. It has two options. Option A would have an initial lower cost but would require a significant expenditure for rebuilding after 4 years. Option B would require no rebuilding expenditure, but its main- tenance costs would be higher. Since the Option B machine is of initial higher quality, it is expected to...