What is the investment profitability index

Assignment Help Financial Management
Reference no: EM132020474

ABC Inc. is considering an investment of $1,275 million with after-tax cash inflows of $232 million per year for six years and an additional after-tax salvage value of 106 million in Year 6. The required rate of return is 6%. What is the investment’s Profitability Index (PI)?

Reference no: EM132020474

Questions Cloud

What is the standard deviation of these returns : What is the standard deviation of these returns?
What is the after-tax salvage value : Today, it is selling this machinery for $12,658. What is the after-tax salvage value if the tax rate is 29 percent?
What is the nominal rate : Suppose the real rate is 19.51% and the inflation rate is 4.89%. What is the nominal rate?
Calculate the payback period : Payback The company requires all projects to payback within 3 years. Calculate the payback period.
What is the investment profitability index : The required rate of return is 6%. What is the investment’s Profitability Index (PI)?
Expects earnings before interest and taxes : Victoria Enterprises expects earnings before interest and taxes (EBIT) next year of $ 2.3 million.
What is the modified internal rate of return : What is the modified internal rate of return (MIRR) of this project given the following cash flows?
Firm sell to break even on switch to credit policy : How many additional units per month must the firm sell to breakeven on a switch to a 30-day credit policy?
Funding a retirement goal : He can create the retirement fund by making a single lump-sum deposit today. Use next table to solve the following problems.

Reviews

Write a Review

Financial Management Questions & Answers

  Market rate of return for this type of security

How much should you expect to pay per share if the market rate of return for this type of security is 5% at the time of your purchase?

  All future dividends are expected to grow

its next dividend is expected to be $3 per share, and all future dividends are expected to grow at 5 percent per year, indefinitely. What is its WACC?

  Paying dividends-what is the current share price

Estes Park Corp. pays a constant $9.20 dividend on its stock. The company will maintain this dividend for the next 8 years and will then cease paying dividends forever. If the required return on this stock is 12 percent, what is the current share pri..

  What was the stock price per share

What was the stock price per share of General Motors common stock at year end 2016? How did this compare to basic earnings per share? Would you invest (buy stock) in General Motors? Why or why not?

  Social security progressive benefits replacement rates

According to the social security progressive benefits replacement rates for 2014 below

  What is the conversion premium for this bond

What is the minimum value of the bond? Comparable nonconvertible bonds are priced to yield 7 percent. What is the conversion premium for this bond?

  Financing foreign trade can be very risky

Financing foreign trade can be very risky and company may not receive its payments because of different issues such as fraud, political issues, economic issues,

  Proper cash flow amount to use as the initial investment

Parker & Stone, Inc., is looking at setting up a new manufacturing plant in South Park to produce garden tools. The company bought some land six years ago for $4.8 million in anticipation of using it as a warehouse and distribution site, but the comp..

  What is the sustainable growth rate for rock

What is the sustainable growth rate for Rock?

  Determine the cash inflows and outflows for each year

Determine the cash inflows and outflows for each year - corporate policy of not accepting projects that take more than 3.5 years to pay for themselves, and assuming an 11% cost of capital.

  What is value if the interest is paid annually

what is the value of the bond? What is the value if the interest is paid annually?

  Make profit from the arbitrage opportunity

The forward price of wheat for delivery in three months is $3.90 per bushel, while the spot price is $3.60. The three-month interest rate in continuously compounded terms is 8% per annum. What is the strategy followed to make a profit from the arbitr..

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