What is the profitability index of project

Assignment Help Finance Basics
Reference no: EM132847434

A project costing $6,200 initially should produce cash inflows of $2,860 per year at the end of Year 2, Year 3, and Year 4. The project will be shut down and will be sold at the end of Year 4 for an estimated net cash amount of $3,300.

a) What is the profitability index of this project if the required rate of return is 11.3 percent?

b) There is a second project which has a credible profitability index of 1.80. If your financial condition only allows you to invest one of the two projects, which would you go based on their profitability indices?

Reference no: EM132847434

Questions Cloud

Calculate the total amount of money : 4. Tia is currently in grade 9 and plans on saving money for college. She plans on depositing $200 each month for the next 4 years into an account which pays an
Compare the two project financing methods : Compare the two project financing methods: equity and debt. Also please compare the capital cost of equity and debt.
Determining the cost-efficiency and liquidity position : Explain what are some of the measures you can take to improve ASB bank performance competitively? What financial ratios can you employ to evaluate
Find the market value of equity : Find the "market" value of equity that produces consistency in the D/E ratio, beta levered, and the WACC. Use the iteration method.
What is the profitability index of project : a) What is the profitability index of this project if the required rate of return is 11.3 percent?
What is the bond ytm : 1. You just purchased a semi-annual coupon bond which matures in 5 years. The bond has a face value of $1,000, an 8% coupon rate, and its current yield is 8.29%
Common stock value-the market value of? lawrence : Find the market value of? Lawrence's shares when dividends are expected to grow at 8?% annually for 3? years, followed by a 5?% constant annual growth rate in
Unit 20 Principles of Structural Design Assignment : Unit 20 Principles of Structural Design Assignment Help and Solution, Higher National Diploma in Business - Assessment Writing Service
Identify level of responsibility required : In a short report you are required to comment on two work tasks you have completed in a financial services environment. For example:

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

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