Question
Consider the following cash flows for projects A and B. Year
Consider the following cash flows for projects A and B.
Year Project A Project B
0 -$1000 -$1000
1 375 900
2 375 700
3 375 500
4 375 -200
5 -100 200
The cost of capital for both projects is 10%. What is the profitability index of projects A and B, respectively?
Answers
Year Particular 2 Cash Flow Project A Project B Discount Factor Present Value 2*3 3 Project A Project B 0 Initial Cost 1 Cash Flows 2 Cash Flows 3 Cash Flows 4 Cash Flows 5 Cash Flows (1,000) S 375 S 375 S 375 $ 375 S (100) S (1,000) 900 700 500 (200) 200 S S S 1 S 0.909 S 0.826 S 0.751 S 0.683 S 0.621 S $ (1,000.00) S (1,000) 340.91 S 818 309.92 S 579 281.74 S 376 256.13 S (137) (62.09) S 124 126.61 $ 759.93 NPV Profitability Index = Present value of cash Inflow Present value of cash outflow For Project A= 1126.61 1000 1.13 For Project B= $1,760 $1,000 1.76
Similar Solved Questions
1 answers
11.2-33 Question Help The average annual return over the period 1886-2006 for stocks that comprise the...
11.2-33 Question Help The average annual return over the period 1886-2006 for stocks that comprise the S&P 500 is 5%, and the standard deviation of returns is 15%. Based on these numbers, what is a 95% confidence interval for 2007 returns? A. -25%, 25% В. — 15%, 25% С. - 12.5%,...
1 answers
7. Below is the electrolysis of aluminum oxide. How many grams of aluminum oxide is needed...
7. Below is the electrolysis of aluminum oxide. How many grams of aluminum oxide is needed to make 60.0 g of aluminum? Al2O3(s) electrolysis Al(s) + O2(g) 8. 40 g of benzene is mixed with 125 g of bromine. Which is the limiting reagent according the chemical reaction below? CH(C) + Br2(C) + C6H; Br(...
1 answers
What do you think is an effective approach to deal with grievances? why do you feel...
what do you think is an effective approach to deal with grievances? why do you feel this approach is effective?...
1 answers
Sume there are only three possible outcomes for the spot price of a commodity which underlies...
sume there are only three possible outcomes for the spot price of a commodity which underlies a futures contract at the maturity of that futures contract. As seen today, these prices (i.e. those at the maturity of the futures contract) are 90, 100 or 110 and each may occur with probability 1/3, 1/3 ...
1 answers
A capacitive time constant of an RC series circuit is 8.75 ms. The resistance is 2.50...
A capacitive time constant of an RC series circuit is 8.75 ms. The resistance is 2.50 kΩ. Calculate the capacitance of the circuit...
1 answers
Two monatomic gases are sealed in separate insulated containers, and their speed distributions are shown on...
Two monatomic gases are sealed in separate insulated containers, and their speed distributions are shown on the graph above. Which of the following could be true about the gases? Select two answers. The gases are at the same temperature, but the atoms of Gas 1 are more massive than those of Gas ...
1 answers
Use the Limit Comparison Test to determine whether the series converges. The Limit Comparison Test with...
Use the Limit Comparison Test to determine whether the series converges. The Limit Comparison Test with § 13K-3K) shows that the series diverges. k= 1 Consider the following convergent series. Complete parts a through c below. a. Use Sn to estimate the sum of the series. S2 (Round to seven deci...
1 answers
Problem #3: Assume you have a 4.332 MHz master clock as an input to your counter,...
Problem #3: Assume you have a 4.332 MHz master clock as an input to your counter, and you need to generate evenly-spaced single-cycle pulses to enable a digital audio circuit at a target rate of 44,100 Hz. How many master clock cycles occur for every output pulse? Show your calculation. a) b) Since ...
1 answers
NASCAR fans love race day when they get a chance to cheer on their favorite team! If a driver was able to travel 600 miles in 3 hours, what was his average speed?
NASCAR fans love race day when they get a chance to cheer on their favorite team! If a driver was able to travel 600 miles in 3 hours, what was his average speed?...
1 answers
Common stock problem
You have finally saved $10,000 and are ready to make your first investment. You have the three following alternatives for investing that money:• A capital cities with a par value of $1,000, an interest rate of 8.75 percent, and a maturity of 12 years. The bond is selling for $1,314.• south...
1 answers
An object with a mass of #2 kg# is on a surface with a kinetic friction coefficient of # 2 #. How much force is necessary to accelerate the object horizontally at #12 m/s^2#?
An object with a mass of #2 kg# is on a surface with a kinetic friction coefficient of # 2 #. How much force is necessary to accelerate the object horizontally at #12 m/s^2#?...
1 answers
Read the scenario below. Outline a plan to address this patient’s concerns and the reason for...
Read the scenario below. Outline a plan to address this patient’s concerns and the reason for admission. In your plan, be sure to: identify interventions (with rationale) to support the patient. identify interventions (with rationale) to address behaviors of the hospital staff. Each student wi...
1 answers
Suppose that the average U.S. household uses 14600 kWh (kilowatt-hours) of energy in a year. If...
Suppose that the average U.S. household uses 14600 kWh (kilowatt-hours) of energy in a year. If the average rate of energy consumed by the house was instead diverted to lift a 2130 kg car 11.3 m into the air, how long would it take? Number Using the same rate of energy consumption, how long would it...
1 answers
How is specie standard money different from specie money?
how is specie standard money different from specie money?...
1 answers
Help if you can!! Select all of the correct statements about reaction quotients and equilibrium constants...
Help if you can!! Select all of the correct statements about reaction quotients and equilibrium constants from the choices below. A reaction quotient equals the equilibrium constant at equilibrium. In a reacting mixture K is the ratio of product to reactant concentrations. As a reaction progresses b...
1 answers
A liquid feeder applies a 4% saturated sodium fluoride solution to drinking water. This liquid feeder...
A liquid feeder applies a 4% saturated sodium fluoride solution to drinking water. This liquid feeder increases the fluoride concentration from the natural background level of 0.4 mg F/liter to 1 mg F/liter. The commercial sodium fluoride powder contains 45% F by weight. Determine: 1. The pounds of ...
1 answers
20- In cheek DNA extraction procedure, what is the purpose of heating a. To speed up...
20- In cheek DNA extraction procedure, what is the purpose of heating a. To speed up the DNA precipitation b. To hydrolyze protein content c. To lysis cell d. To separate DNA fragments 21- What is the reason of using Taq DNA Polymerase in most of the PCR reactions. a. Taq polymerase is sensitive to ...
1 answers
The reter to data beloud which Contoins the a fa below which rLet c percantage chorge ) instuck mor ndx ouer tho hi...
the reter to data beloud which Contoins the a fa below which rLet c percantage chorge ) instuck mor ndx ouer tho hirst tive tradine daus ot the year and percent ge clounge Cy) in the indox Over the whole year. The line line tur the dote is given belw tind and interpret the ee tticient dt determi net...
1 answers
24. The long run average cost curve decreases due to a. A reduction in short run marginal cost b. A reduction in sh...
24. The long run average cost curve decreases due to a. A reduction in short run marginal cost b. A reduction in short run average cost curves c. Economies of scale d. Both a and b e. Both b and c You are given the following cost data: Quantity TVC TFC REALITATE 1250 12 25 34 46 25. What can you say...