Question
In: Finance
The Sloan Corporation is trying to choose between the following two mutually exclusive design projects: Year...
|
The Sloan Corporation is trying to choose between the following two mutually exclusive design projects: |
| Year | Cash Flow (I) | Cash Flow (II) | |||||
| 0 | –$ | 63,000 | –$ | 15,500 | |||
| 1 | 28,900 | 7,900 | |||||
| 2 | 28,900 | 7,900 | |||||
| 3 | 28,900 | 7,900 | |||||
| a-1. | If the required return is 10 percent, what is the profitability index for both projects? (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.) |
| a-2. | If the company applies the profitability index decision rule, which project should the firm accept? |
| b-1. | What is the NPV for both projects? (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.) |
| b-2. | If the company applies the NPV decision rule, which project should it take? |
Solutions
jeff jeffy answered 3 years agoRelated Solutions
The Sloan Corporation is trying to choose between the following two mutually exclusive design projects: ...
The Sloan Corporation is trying to choose between the following
two mutually exclusive design projects:
Year
Cash Flow
(I)
Cash Flow
(II)
0
–$
61,000
–$
18,300
1
28,100
9,950
2
28,100
9,950
3
28,100
9,950
a-1
If the required return is 10 percent, what is the profitability
index for both projects? (Do not round intermediate
calculations. Round your answers to 3 decimal places, e.g.,
32.161.)
Profitability
Index
Project I
Project II
a-2
If...
Cori's Sausage Corporation is trying to choose between the following two mutually exclusive design projects: Year...
Cori's Sausage Corporation is trying to choose between the
following two mutually exclusive design projects:
Year
Cash Flow (I)
Cash Flow (II)
0
–$
47,000
–$
21,800
1
23,800
12,300
2
23,800
12,300
3
23,800
12,300
a-1.
If the required return is 11 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.)
a-2.
If the company applies the profitability index decision rule,
which project should...
Cori's Sausage Corporation is trying to choose between the following two mutually exclusive design projects: Year...
Cori's Sausage Corporation is trying to choose between the
following two mutually exclusive design projects: Year Cash Flow
(I) Cash Flow (II) 0 –$ 62,000 –$ 36,800 1 28,300 16,800 2 28,300
16,800 3 28,300 16,800 a-1. If the required return is 11 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.) a-2. If the company applies the
profitability index decision rule, which project should...
Cori's Sausage Corporation is trying to choose between the following two mutually exclusive design projects: ...
Cori's Sausage Corporation is trying to choose between the
following two mutually exclusive design projects:
Year
Cash Flow (I)
Cash Flow (II)
0
–$
50,000
–$
24,800
1
24,700
13,200
2
24,700
13,200
3
24,700
13,200
a-1.
If the required return is 11 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.)
Cori's Sausage Corporation is trying to choose between the following two mutually exclusive design projects: ...
Cori's Sausage Corporation is trying to choose between the
following two mutually exclusive design projects:
Year
Cash Flow (I)
Cash Flow (II)
0
–$
62,000
–$
36,800
1
28,300
16,800
2
28,300
16,800
3
28,300
16,800
a-1.
If the required return is 11 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.)
a-2.
If the company applies the profitability index decision rule,...
Cori's Sausage Corporation is trying to choose between the following two mutually exclusive design projects: ...
Cori's Sausage Corporation is trying to choose between the
following two mutually exclusive design projects:
Year
Cash Flow (I)
Cash Flow (II)
0
–$
60,000
–$
34,800
1
27,700
16,200
2
27,700
16,200
3
27,700
16,200
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.)
a-2.
If the company applies the profitability index decision rule,...
Cori's Sausage Corporation is trying to choose between the following two mutually exclusive design projects: ...
Cori's Sausage Corporation is trying to choose between the
following two mutually exclusive design projects:
Year
Cash Flow (I)
Cash Flow (II)
0
–$
59,000
–$
33,800
1
27,400
15,900
2
27,400
15,900
3
27,400
15,900
a-1.
If the required return is 11 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.)
a-2.
If the company applies the profitability index decision rule,
which...
Cori's Sausage Corporation is trying to choose between the following two mutually exclusive design projects: ...
Cori's Sausage
Corporation is trying to choose between the following two mutually
exclusive design projects:
Year
Cash Flow (I)
Cash Flow (II)
0
–$
65,000
–$
39,800
1
29,200
18,000
2
29,200
18,000
3
29,200
18,000
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.)
Cori's Sausage Corporation is trying to choose between the following two mutually exclusive design projects: ...
Cori's Sausage Corporation is trying to choose between the
following two mutually exclusive design projects:
Year
Cash Flow (I)
Cash Flow (II)
0
–$
74,000
–$
17,000
1
21,900
9,200
2
21,900
9,200
3
21,950
9,200
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....
Jefferson International is trying to choose between the following two mutually exclusive design projects: Year Cash...
Jefferson International is trying to choose between the
following two mutually exclusive design projects:
Year
Cash Flow A
Cash Flow B
0
-$75,000
-$38,000
1
32,400
17,800
2
30,200
14,200
3
36,600
19,800
The required return is 12 percent.
i) Rank the projects using profitability index (PI) decision
rule.
ii) If the company applies the NPV decision rule, which project
should it take?
iii) Given your first two answers, which project should the firm
accept?
B
Suppose the company is...
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