Describe how the profitability index is calculated

Assignment Help Finance Basics
Reference no: EM131732204

Question: Profitability Index. Concerning the profitability index:

a. Describe how the profitability index is calculated and describe the information this measure provides about a sequence of cash flows. What is the profitability index decision rule?

b. What is the relationship between the profitability index and the NPV? Are there any situations in which you might prefer one method over the other? Explain.

Reference no: EM131732204

Questions Cloud

What are other qualities that relate to professionalism : What are other qualities that relate to professionalism, Define and describe the classification of each drugs selected,
Develop a five year growth plan : Assessment Brief - Project - Building on the financial position of their simulated hotel, students are required to develop a 5 year growth plan
Legal-ethical or negative business consequences might arise : What legal, ethical, or negative business consequences might arise from this situation?
Who are some of the stakeholders that may work on the issues : Briefly describe the global health issue and its impact on the larger health care system (i.e., continents, regions, countries, states, and health departments).
Describe how the profitability index is calculated : Describe how the profitability index is calculated and describe the information this measure provides about a sequence of cash flows.
Define what are the prevalence and incidence for ms : What are the prevalence and incidence for MS. What is the prognosis for Judy
Reasons that foreign manufacturers of products diverse : International Investment Projects. In October 2011, automobile manufacturer Daimler AG announced plans to invest $350 million to manufacture an entirely.
Describe how the achievement of the course outcomes : Reflect back over the past eight weeks and describe how the achievement of the course outcomes in this course have prepared you to meet
Capital budgeting in not-for-profit entities : Capital Budgeting in Not-for-Profit Entities. Are the capital budgeting criteria we discussed applicable to not-for-profit corporations?

Reviews

Write a Review

Finance Basics Questions & Answers

  What is the yield to maturity to the bondholders

What is the yield to maturity to the bondholders?

  Legal liability of shareholders

Cathy says, "I don't have to buy a motor vehicle policy that insures against my legal liability for the property damage of the third party, because my company owns a product and liability insurance which insures against the legal liability of shar..

  The firm paid dividends to preferred stockholders of 40000

pdq corp. has sales of 4000000 the firms cost of goods sold is 2500000 and its total operating expenses are 600000.

  Cash flow for the first year

If the college wishes to receive, at the end of each year, a cash flow that grows at 3% per year for 100 years, what would be the cash flow for the first year?

  Common types of doubts

Which of the following are the most common types of doubts people may have about a source?

  Define system engineering

What are the differences (or similarities) between system engineering and some of the more traditional disciplines such as civil engineering, electrical engineering, mechanical engineering, and so on?

  How does statement of cash flows relate to the balance sheet

Why do we adjust net income for changes in working capital accounts? How does the statement of cash flows relate to the balance sheet ? How does the statement of cash flows relate to the income statement?

  Abc stock returns with the original portfolio

1) If the correlation coefficient of ABC stock returns with the original portfolio return is 0.5, what is the standard deviation of her new portfolio which includes the ABC stock?

  What amount is due at the end of the eight year

What amount will be due if the loan is repaid at the end of year 1? What is the repayment at the end of year 4? What amount is due at the end of the eighth year?

  Major expansion of its product line

Fijisawa Inc. is considering a major expansion of its product line and has estimated the following cash flows associated with such an expansion. The initial outlay would be $1,800,000,and the project would generate incremental free cash flows of $..

  Determine maximum loss risk

John has just begun investing, & one of his friends was mentioning how he could use short selling as an effective method to drive up his returns when market started to go down.

  Compute helio’s ending inventory and net income for 2011

Early in 2012 styles appeared to change, and the average market price of the inventory written down at the end of 2011 rebounded to $2.80 per item. Record the entry made by Helio to recognize the inventory recovery. What entry would Helio record i..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd