What is profitability index for each project

Assignment Help Financial Management

Reference no: EM131865003

Cori's Sausage Corporation is trying to choose between the following two mutually exclusive design projects:

Year Cash Flow (l) Cash Flow (ll)

0 -$65,000 -$ 17,900

1 30,000 9,650

2 30,000 9,650

3 30,000 9,650

a-1. If the required return is 12 percent, what is the profitability index for each project? (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.) Profitability Index

Project I ____

Project II ______

a-2. If the company applies the profitability index decision rule, which project should the firm accept?

Project I

Project II

b-1. What is the NPV for each project? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

Project I $ ____

Project II $____

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

Project I

Project II

Reference no: EM131865003

Questions Cloud

What is current market price of the bonds : The current market rate of interest on the Bright Sun bonds is 11.36 percent. What is the current market price (intrinsic value) of the bonds?

Calculate the NPV of both projects : Calculate the NPV of both projects if the discount rate of the firm is 10 percent.

Result of your stronger understanding of managerial finance : How will your effectiveness as a manager increase as a result of your stronger understanding of managerial finance?

How would you integrate knowledge of financial management : How would you integrate knowledge of financial management in your overall assessment of a business's health and in your planning for growth?

What is profitability index for each project : If the required return is 12 percent, what is the profitability index for each project? What is the NPV for each project?

Value of investment-money is invested in us-great britain : What would be the value of the investment if the money is invested in U.S and Great Britain?

Research top five companies in the home security market : Research the top 5 companies in the home security market and distill the essence for each of their value propositions in 140 CHARACTERS OR LESS

Contribute to social responsibility-positive social change : To what extent can the content from this course contribute to social responsibility and positive social change?

Capital structure-weighted average cost of capital : RON Ltd has the capital structure components: If the firm faces a corporate tax rate of 30%, compute RON Ltd's Weighted Average Cost of Capital (WACC).

User Account

All Pages