What it the profitability index for investment project O?
Q: Which is the accounting rate of return using the average investment?
A: Summary of the relevant information as provided in the question : cost of investment = £…
Q: What is the profitability index of this project?
A: Profitability index is one of the capital budgeting method which helps in rejecting or accepting the…
Q: (a) Compute the profitability index for each project. (b) Based on the profitability index, which…
A: It's a method of capital Budgeting. It helps us to know whether a project must be accepted or…
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A: The internal rate of return (IRR) is a capital budgeting metric used to gauge the benefit of…
Q: Discuss the difficulties in using Net Present Value [NPV] as an investment appraisal method.
A: The net present value method is used by the company for the evaluation of the profitability of…
Q: Describe the method used to evaluate investment projects?
A: Answer: The following are the methods are used to evaluate the investment proposals of a company.…
Q: What is the present value index for Project A?
A: Present Value Index: It represents the ratio of the project's net present value to the initial cost…
Q: /hat is the internal rate of return of the proposed project?
A: IRR(INTERNA RATE OF RETURN), is the rate that equates the present value of cash flows and the future…
Q: What are the best short-term and long-term investment strategies going forward into the future?
A: Short term investment strategy – Those investment that are usually traded for upto a span of 3 years…
Q: What is the required rate of return on the project? (De
A: Capital Asset Pricing Model (CAPM) is a measure used for the measurement of systematic risk. It…
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A: The net present value is the sum of the present value of all the cash flows in the future subtracted…
Q: Describe the affects of the present value of an investment.
A: Present value of the investment: Present value of the investment is calculated using the cash flows…
Q: Describe the concept applied to the creation of an investment project portfolio?
A: The question is based on the concept of creation of portfolio for investment , which is combination…
Q: How is the project profitability index computed, and what does it measure?
A: Profitability Index Profitability index is define as the ratio of net present value of cash inflow…
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A: The capital asset pricing model is given by the below equation E(Ri) = Rf + B(E(Rm) - Rf), where…
Q: What do you mean by rate of return on the investment?
A: What do you mean by rate of return on the investment?
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A: Answer: Return on investments is an instrument which can be used to calculate the company’s…
Q: Explain the term Value investing strategies?
A: SOLUTION:- Benjamin Graham, an American economist, investor, and professor, pioneered a new method…
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A: There are many methods to evaluate the investment value of the project like Net Present Value,…
Q: What are the shortcomings of the internal rate of return criterion? How do you make an investment…
A: Internal rate of return is the discount rate at which the present value of the future cash flow and…
Q: method. Does the project offer an acceptable rate of return? Evaluate the profitability measure…
A: Revenue = $11 *106 Fixed costs = $2*106 Variable cost = $7*106 Depreciation is $2.4 *106 /year for…
Q: How to calculate the economic profit of each project?
A: Question 4 A: Economic profit is the profits arrived after deducting opportunity cost from the…
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A: Calculate the initial investment and operating cash flow for the given investment: Excel formula:
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A: Net present value:- Net present value is the investment evaluation technique, where we evaluate…
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A: An investment is simply a financial instrument formed with the goal of allowing money to grow. One,…
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A: The time span for which an asset or a project generates profits for the owner is known as the…
Q: .
A: a. Payback period b. Internal rate of return c. Profitability index d. Net present value
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A: Investment Yield: It defined as Earnings or income which is earned on investment over the period of…
Q: How to determine the initial investment if I have the flows, of the npv and the irr
A: IRR is the rate at which NPV becomes zero.
Q: Define the term Profitability Index? How can we consider the profitability index of a project?
A: The profitability index (PI), then again alluded to as the value investment ratio (VIR) or profit…
Q: What is meant by an investment project’s internal rate of return? How is the internal rate of return…
A:
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A: Investors always select investment strategies according to their suitability. Investors have…
Q: What is a true indicator of the project's profitability?
A: Answer: Capital budgeting is the whole project investment process and the decision of whether it…
Q: HOW TO KNOW THE RATIO OFCAPITAL INVESTMENT?
A: Ratio of capital investment is the ratio of net operating profit to total capital investment.
Q: When can a project may fail the net-investment test?
A: Yes, a firm can initiate the withdrawal of the amount invested from the investment pool in which…
Q: How can we determine the required capital investment for an investment project?
A: Estimation of the capital investment is required because this is the foremost decision while…
Q: List the factors of time and uncertainty of investment project?
A: Investment projects are a complex environment and there are many risks involved. one of those group…
Q: What is the portfolio investment concept?
A: Portfolio is a group of stock, shares and bonds owned by the investors. It is a combination of asset…
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A: The term ROIC is used to calculate the profitability or return on invested capital that a business…
Q: Discuss and evaluate the use of the payback period as an investment criterion.
A: Payback Period: It refers to the period in which a project or an investment recovers its initial…
Q: Explain Yields on Investment Annuities?
A: The question is based on the concept of calculation yield, which describes the returns to the…
Q: Calculate the internal rate of return of each investment opportunity. Daced
A: Internal Rate of Return(IRR) is one of the capital budgeting techniques used for finding the…
Q: Which of the following is a present value method of analyzing capital investment proposals? Uaverage…
A: Cost Accounting: It is the process of collecting, recording, analyzing the cost, summarizing cost,…
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- Eddie Corporation is considering the following three investment projects (Ignore income taxes.): Project C $ 12,900 Project D $ 60,000 Project E $ 105,000 $ 16,080 $ 90,600 $ 124,910 Investment required Present value of cash inflows The profitability index of investment project D is closest to: Multiple Choice O 0.34 0.51 0.49 1.51Eddie Corporation is considering the following three investment projects (Ignore income taxes.): Project D $ 65,600 $ 76,096 Multiple Choice Investment required Present value of cash inflows Rank the projects according to the profitability index, from most profitable to least profitable. O E, C, D E, D, C D, C, E Project C $ 57,600 $ 63,936 C, E, D. Project E $ 136,000 $ 148,240(Ignore income taxes in this problem.) Your Corporation is considering the following three investment projects: N p $146,000 $175,000 $195,000 $207,000 $99,850 $108,250 $142,500 $189,000 Initial investment Present value of cash flows What it the profitability index for investment project P? O .91 .09 O .10 О.18
- (Ignore income taxes in this problem.) Your Corporation is considering the following three investment projects: Projects Apple Orange Grape Initial investment $46,000 $75,000 $95,000 Present value of cash flows $49,850 $80,250 $102,500 Which of the choices below ranks the projects according to the profitability index, from most profitable to least profitable? Group of answer choices Orange, Grape, Apple Apple, Orange, Grape Grape, Orange, Apple Orange, Apple, Grape Apple, Grape, OrangeCarmen, Inc. is considering three different independent investment opportunities. The present value of future cash flows, initial investment, net present value, and profitability index for each of the projects are as follows: Project A Project B Project C Present value of future cash flows $450,100 $313,100 $405,000 Initial investment 200,000 155,000 190, еее Net present value $250, 100 $158,100 $215,000 Profitability index 2.25 2.02 2.13 In what order should Carmen prioritize investment in the projects? Multiple Cholce С, В, А O A, B, C А, С, В C, A, BConsider the following projects: Cash Flows ($) Project D E CO00 C101 -11,700 23,400 -21,700 37,975 Assume that the projects are mutually exclusive and that the opportunity cost of capital is 12%. a. Calculate the profitability index for each project. b-1. Calculate the profitability-index using the incremental cash flows. b-2. Which project should you choose?
- Profitability index. Given the discount rate and the future cash flow of each project listed in the following table, . use the Pl to determine which projects the company should accept. What is the Pl of project A? i Data Table (Round to two decimal places.) (Click on the following icon o in order to copy its contents into a spreadsheet.) Cash Flow Project A -%241,900,000 $150,000 $350,000 Project B Year 0 $2,300,000 $1,150,000 $950 000 $750,000 $550,000 Year 1 Year 2 Year 3 $550,000 Year 4 $750,000 $950,000 4% Year 5 $350.000 Discount rate 18% Print DoneThe management of ABC Corporation is considering the following three investment projects (ignore income taxes): Investment required Present value of cash inflows Project X Project Y Project Z Project Y $ 22,000 $40,000 $56,000 According to the profitability index, the most profitable project is: Project X $40,000 $60,000 $90,000 Project ZThe management of ABC Corporation is considering the following three investment projects (ignore income taxes): Investment required Present value of cash inflows O Project Y Project X Project Y Project Z Project X Project Z $ 22,000 $40,000 $56,000 According to the profitability index, the most profitable project is: $40,000 $60,000 $90,000
- A firm is considering the following independent projects. Project Investment Present value offuture cash flows NPV A $130 $176 $46 B $103 $115 $12 C $183 $287 $104 D $161 $199 $38 E $184 $273 $89 What is the Profitability Index of Project B? Question 5Answer a. 0.85 b. 1.12 c. 0.89 d. 1.18The management of Winstead Corporation is considering the following three investment projects (Ignore income taxes.): Project Q Project R Project S Investment required $ 57,200 $ 97,200 $ 176,000 Present value of cash inflows $ 62,092 $ 111,792 $ 193,320 The only cash outflows are the initial investments in the projects. Required: Rank the investment projects using the project profitability index.Consider the following two mutually exclusive projects:Year Cash Flow (X) Cash Flow (Y)0 -$365,000 -$38,0001 25,000 16,0002 65,000 12,0003 65,000 17,0004 425,000 15,000Whichever project you choose, if any, you require a 13 percent return on your investment. i. Which investment will you choose if you use the payback decision criteria? Justify your answer.ii. Which investment will you choose if you use the NPV decision criteria? Justify your answer.iii. Which project will you choose ultimately based on your answers above?