Profitability index decision rule

Assignment Help Operation Management
Reference no: EM131173240

The Sloan Corporation is trying to choosebetween the following two mutually exclusive design projects:

Year   Cash Flow(1)  Cash Flow (11)

0          -$51,000        -$14,400

1             24,800              7,800

2            24,800              7,800

3           24,800               7,8001

1. If the required return is 10 percent and the company applies the profitability index decision rule, which project should the firm accept?

2. If the company applies the NPV decision rule, which project should it take?

3. Explain why your answers in (a) and (b) are different.

Reference no: EM131173240

Questions Cloud

Explain fdic deposit insurance value as an option : Explain FDIC deposit insurance's value as an option. and Why are options almost always more valuable than a forward contract if all pertinent details were exactly the same (such as asset, expiration date, quantity involved, and quality of the asse..
Why is heartburn common during pregnancy : Infectious disease is the leading cause of death in developing countries. After a country has undergone nutrition transition, what types of diseases are the leading causes of death?
Calculate the advertising expense : Calculate the Advertising Expense for the year ended 30 June 2012.2 marksc. With reference to one accounting principle, explain why the Advertising Expense for the year is not thesame as the amount paid for advertising.
Explain the major theoretical paradigms of sociology : Define the basic concepts used in the discipline of sociology. Explain the major theoretical paradigms of sociology. Use technology and information resources to research issues in sociology.
Profitability index decision rule : 1. If the required return is 10 percent and the company applies the profitability index decision rule, which project should the firm accept? 2. If the company applies the NPV decision rule, which project should it take?
How many plaintext blocks will be affected : Consider a block cipher that is used in cipher block chaining mode. Suppose that during transmission, the Ci i-th ciphertext block, is corrupted. How many plaintext blocks will be affected? Answer the same question for the case of cipher feedback ..
Consider two period endowment economy with government : Consider a two period endowment economy with government. Suppose the government can impose lumpsum taxes and issue public debt. De?ne a sequential competitive equilibrium for this economy. De?ne a Arrow Debreu competitive equilibrium for this economy..
What is the next sensible block length of idea : What is the next sensible block length of IDEA, if the same scheme and the same primitives are being used, but only the length of the registers is increased? (This length is 16 in IDEA.) What is wrong with the intermediate values?
Explain tay-sachs disease : Explain Tay-Sachs disease. Imagine you are a genetic counselor working with a couple who have just had a child who is suffering from Tay-Sachs disease. Neither parent has been tested for Tay-Sachs disease nor have there been any previous cases of ..

Reviews

Write a Review

Operation Management Questions & Answers

  Identify legal and ethical issues involved

Up to this point, Ed has been paying all of his employees a salary. Discuss the benefits and drawbacks of this procedure. In addition, identify legal and ethical issues involved. Consider also the impact on the business to have employees who potentia..

  Presentation on low quality patient care due to inventory

Presentation on Low Quality Patient Care due to Inventory Mismanagement of Drugs in African Hospitals

  Summarize which type of health care organization

Write a paper that identifies a specific for-profit unionized and nonprofit non-unionized health care organization and briefly describe each. Then compare and contrast the similarities/differences in human resource (HR) management for organization..

  Explain how does project audit differ from performance

Explain how does project audit differ from performance measurement control system. Explain in your own words. Explain how do these project tools help with quality management.

  Assuming-size of fish population satisfies logistic equation

A biologist stocked a lake with 45 fish and estimated the carrying capacity (the maximal population for the fish of that species in that lake) to be 7,000. The number of fish tripled in the first year. Assuming that the size of the fish population sa..

  Economic conditions and cost cutting measures

In light of economic conditions and cost cutting measures occurring in the health care industry across the US, identify strategies for creating a motivating environment. Identify positive reinforcement techniques that may be used by a manager. Identi..

  Identify the prevalent employee benefits practices

Conduct some research in order to identify the prevalent employee benefits practices for that industry. Also, what factors (e.g., technology, competition, and government regulation) might influence the present practices? How will these practice chang..

  Correct stoppage in the sewer line of her house

Richardson hired J.C. Flood Company, a plumbing contractor, to correct a stoppage in the sewer line of her house. The plumbing company's "snake" device, used to clear the line leading to the main sewer, became caught in the underground line. Flood Co..

  What return would be expected by an investor whose portfolio

What return would be expected by an investor whose portfolio was 15% market portfolio and 85% Treasury bills if the risk-free rate was 7% and the market risk premium was 11%?

  Name three examples of firms conducting a cost leadership

Name three examples of firms conducting a cost leadership strategy that use no advertising. Should they start advertising? Why or Why not.

  Strategies a leader should consider to influence a group

Those leaders who have the greatest impact are those who can influence a group or team. Briefly discuss the difference between a group and a team, and the strategies a leader should consider to influence a group or team.

  In a distributive strategy

In a distributive strategy, usually each side will include more items on its opening list than it really cares about in order to have something it can give away.

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