Calculate the profitability index for project

Reference no: EM131935616

Question: You are asked to evaluate the following two projects for the Norton corporation. Use a discount rate of 10 percent. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. Project X (Videotapes of the Weather Report) ($34,000 Investment) Project Y (Slow-Motion Replays of Commercials) ($54,000 Investment) Year Cash Flow Year Cash Flow 1 $ 17,000 1 $ 27,000 2 15,000 2 20,000 3 16,000 3 21,000 4 15,600 4 23,000

a. Calculate the profitability index for project X. (Do not round intermediate calculations and round your answer to 2 decimal places.)

b. Calculate the profitability index for project Y. (Do not round intermediate calculations and round your answer to 2 decimal places.)

c. Which project would you select? Project X Project Y

Reference no: EM131935616

Questions Cloud

The company follows the residual dividend policy : If the company follows the residual dividend policy, how much cash dividend can be distributed, and what will be its dividend payout ratio?

Explain who is doing financially better on each measure : You have been asked to perform financial condition ratio analyses for two communities, Thriftyville and Myopica, based on data culled from each of their CAFRs.

Cash flows of the two mutually exclusive projects : Consider the following cash flows of the two mutually exclusive projects for Mario Brothers.

When payment is made on the net due date using ear : Calculate the cost of trade credit when payment is made on the net due date using EAR (also known as APY).

Calculate the profitability index for project : You are asked to evaluate the following two projects for the Norton corporation. Use a discount rate of 10 percent. Use Appendix B for an approximate answer.

What amount of money will you have at the end of the year : If you continue making these monthly investments for 30 years, what amount of money will you have at the end of the 30th year?

What per visit price must be set for service to breakeven : What per visit price must be set for the service to breakeven?

Compute the incremental income after taxes : You have been asked to assess the expected financial impact of each of the following proposals to improve the profitability of credit sales made.

What are the expected cash collections for months : Utilizing the attached data what are the expected cash collections for months 3 & 4.

User Account

All Pages