Reject the project based on this index value

Assignment Help Financial Management

Reference no: EM131343128

A project has cash flows of -$152,000, $60,800, $62,300 and $75,000 for years 0 to 3, respectively. The required rate of return is 13 percent. What is the profitability index? Should you accept or reject the project based on this index value?

Reference no: EM131343128

Questions Cloud

Explain business debt interest deductibility : Please explain business debt interest deductibility? A non-dividend-paying stock has a futures contract with a price of $69.2 and a maturity of two months. If the risk-free rate is 3.4 percent, what is the price of the stock? Suppose the 180-day S&P ..

What is company target debt–equity ratio : Fama’s Llamas has a WACC of 9.3 percent. The company’s cost of equity is 11.2 percent, and its pretax cost of debt is 7.9 percent. The tax rate is 34 percent. What is the company target debt–equity ratio

Contracts to use in designing your cross-hedge strategy : You have been assigned to implement a three-month hedge for a stock mutual fund portfolio that primarily invests in medium-sized companies. Should you be long or short in the Midcap 400 futures contracts? determine the appropriate number of contracts..

Identified two mutually exclusive projects : HH Companies has identified two mutually exclusive projects. Project A has cash flows of -$40,000, $21,200, $16,800, and $14,000 for Years 0 to 3, respectively. Project B has a cost of $40,000 and annual cash inflows of $25,500 for 2 years. At what r..

Reject the project based on this index value : A project has cash flows of -$152,000, $60,800, $62,300 and $75,000 for years 0 to 3, respectively. The required rate of return is 13 percent. What is the profitability index? Should you accept or reject the project based on this index value?

Manufactures time series photographic equipment : Photochronograph Corporation (PC) manufactures time series photographic equipment. It is currently at its target debt–equity ratio of .60. It’s considering building a new $71.5 million manufacturing facility. If the tax rate is 35 percent, what is th..

What do you expect the price of these bonds : Bond P is a premium bond with an 7.8 percent coupon, a YTM of 6.55 percent, and 15 years to maturity. Bond D is a discount bond with an 7.8 percent coupon, a YTM of 9.55 percent, and also 15 years to maturity. If interest rates remain unchanged, what..

What is company total market value of debt : Shanken Corp. issued a bond with a maturity of 15 years and a semiannual coupon rate of 6 percent 2 years ago. The bond currently sells for 95 percent of its face value. The book value of the debt issue is $60 million. What is the company’s total mar..

What is counts unlevered beta : Counts Accounting has a beta of 1.50. The tax rate is 35%, and Counts is financed with 40% debt. What is Counts' unlevered beta? Ethier Enterprise has an unlevered beta of 1.05. Ethier is financed with 45% debt and has a levered beta of 1.15. If the ..

User Account

All Pages