Using the profitability index when evaluating projects

Assignment Help Financial Management

Reference no: EM13948767

Gold Mining, Inc. is using the profitability index (PI) when evaluating projects. Gold Mining’s cost of capital is 14.21 percent. What is the PI of a project if the initial costs are $1965770 and the project life is estimated as 10 years? The project will produce the same after-tax cash inflows of $438912 per year at the end of the year.

Reference no: EM13948767

Questions Cloud

Describe the various ways the cold war was fought : Identify and explain the causes of World War II. In what ways were these causes rooted in World War I? Describe the various ways the Cold War was fought. Be sure to provide specific examples. Identify specific issues confronting the Global South A..

Both bonds make semiannual payments : Filer Manufacturing has 7.7 million shares of common stock outstanding. The current share price is $47, and the book value per share is $5. Filer Manufacturing also has two bond issues outstanding. Assume that the overall cost of debt is the weighted..

Breaking mechanism that binds the cars : As the large ring rotates, the operator can apply a breaking mechanism that binds the cars to the ring, which then allows the cars to rotate with the ring. Assuming the passengers are not belted into the cars, determine the smallest speed of the r..

Process determined the production method : Your text (p.7) describes three processes for determining what gets produced in an economy, the method of producing each item, and who receives each produced item.

Using the profitability index when evaluating projects : Gold Mining, Inc. is using the profitability index (PI) when evaluating projects. Gold Mining’s cost of capital is 14.21 percent. What is the PI of a project if the initial costs are $1965770 and the project life is estimated as 10 years? The project..

What advantages do css have when creating web pages : Explain which structure you prefer and why. Locate two Web sites that utilize this structure, and list their URLs.

Definition of world cinema : Have you seen any films that you would have classified as "World Cinema" before reading Lucia Nagib's essay, "Towards a Positive Definition of World Cinema

Gravitational potential energy of a body of mass : If the mass of the earth is Me, show that the gravitational potential energy of a body of mass m located a distance r from the center of the earth is Vg = - GMem >r. Recall that the gravitational force acting between the earth and the body is F = G(M..

How does the drg concept relate to standard costing concepts : How does the DRG concept relate to the standard costing concepts discussed? Can hospitals use DRGs to control their costs? Explain.

User Account

All Pages