Find what is the present value index of the project

Assignment Help Managerial Accounting
Reference no: EM132587218

When funds for capital investments are limited, projects can be ranked using a present value index. A project with a negative net present value will have a present value index below 1.0. Also, it is important to note that a project with the largest net present value may, in fact, return a lower present value per dollar invested.

Question 1: Let's look at an example of how to determine the present value index.

Question 2: The company has a project with a 5-year life, an initial investment of $195,000, and is expected to yield annual cash flows of $55,500. What is the present value index of the project if the required rate of return is set at 10%

Reference no: EM132587218

Questions Cloud

Describe the phases of the nurse-patient relationship : Describe the phases of the Nurse-Patient relationship as defined by Peplau. Align your presentation regarding the use of Peplau's theory with a current practice
What would be the club roi : Net operating income increases by $25,600. Further assume that this is possible without any increase in operating assets. What would be the club's ROI?
Describe the drug approved by the fda : Describe the drug approved by the FDA. Include the pharmacodynamics and pharmacokinetic properties of the chosen drug. Provide an overview of the disease state.
What is Jacks adjusted basis in the house : Jack purchased a new house 3 years ago. The purchase price were the following; Purchase price $280000. What is Jacks adjusted basis in the house
Find what is the present value index of the project : What is the present value index of the project if the required rate of return is set at 10%. How to determine the present value index.
Treats individuals with anxiety : Imagine you are working for program that treats individuals with anxiety. discuss three internal threats to validity that could influence outcome of evaluation
Calculate the estimated loss on the inventory from the fire : Based on recent history, Hodge's gross profit ratio on Product Tex is 40% of net sales. Calculate the estimated loss on the inventory from the fire
Determine what is the machine payback period : Salvage value of $45,000 at the end of the contract. RNXD Inc. is subject to a 16% discount rate. The net present value of this investment opportunity is?
Department of homeland security : The Department of Homeland Security (DHS) has made a number of strides in recent years, including 2011.

Reviews

Write a Review

Managerial Accounting Questions & Answers

  What is shakira income if any on partial loan repayment

Shakira Inc. repaid Shakira $27,500 of the $137,500 outstanding loan. What is Shakira's income, if any, on the partial loan repayment?

  How does the numbers of food product affect the cost

How does the numbers of food product (small/big menu) affect the cost structure and which is strategy is better and why? estimating product cost?

  Joint products a and b are produced in a single operation

Joint products A and B are produced in a single operation from Material M. 500 gallons of Material M, costing $550, produced 333 gallons of Product A, selling for $3 per gallon, and 167 gallons of Product B, selling for $7 per gallon.

  Solve the annual rate of return

Solve the annual rate of return. It is expected that the oil well will increase annual revenues by $122,625 and will increase annual expenses by $90,000

  What is financial advantage of accepting the special order

The retail chain will purchase additional units in the future. What is the financial advantage (disadvantage) of accepting the special order?

  Under what conditions is a market based transfer price

1.What is a transfer price? Under what conditions is a market based transfer price most likely to be used?

  Statement of no longer than one-page to the audit committee

You are the chief financial officer of General Motors Corporation (GM) at the beginning of 2009. The company’s board of directors has asked you to inform board’s audit committee about the pending audit opinion of Deloitte and Touche, LLP. Prepare an ..

  Alternative for transportation to the job

These costs include $60 under each alternative for transportation to the job. Do a schedule showing the net benefit or advantage of selecting

  What will the cash flows for this project be

The truck will have no effect on revenues, but it is expected to save the firm $20,300 per year in before-tax operating costs, mainly labor - The firm's marginal tax rate is 35 percent. What will the cash flows for this project be?"

  The robinson company has the following current assets

What was Robinson's net investment in working capital each year? The Robinson Company has the following current assets and current liabilities for these two years:

  Calculate the costs using activity-based costing

Calculate the costs using activity-based costing. Allocate the costs of testing, computing, and development based on the rates of activity consumed

  Accrual basis of accounting

Why is usually that the accrual basis of accounting is ordinarily of the preference as compared to over cash basis?

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