Profitability index. Given the discount rate and the future cash flow of each project listed in the following​ table, use the PI to determine which projects the company should accept.   Cash Flow Project U Project V   Year 0 -$1,800, 000 -$2, 400,000   Year 1 ​$450,000 ​$1, 200,000   Year 2 ​$450,000 ​$1,000,000   Year 3 ​$450,000 ​$800, 000   Year 4 ​$450, 000 ​$600,000   Year 5 ​$450,000 ​$400,000   Discount rate 7​% 12​%

Given the discount rate and the future cash flow of each project listed in the following​ table,

use the PI to determine which projects the company should accept.

What is the PI of project​ A?

Enter your answer in the answer box and then click Check Answer.

Given the discount rate and the future cash flow of each project listed in the following​ table, use the PI to determine which projects the company should accept.

What is the PI of project​ U?

​(Round to two decimal​ places.)

Consider the following historical information for Sonny’s Body Shop over the past five years.

Earnings are expected to grow at 10% for the next four years. Using the company’s historical average PE ratio as a bench mark, (a) what is the target stock price next year? (b) What about four years from now?

The Purple Lion Beverage Company expects the following cash flows from its manufacuring plant in Palau over the next 6 years:

Year 1= $100,000

Year 2= $20000

Year 3= $330,000

Year 4= $450,000

Year 5= $750,000

Year 6= $375,000

The CFO of the company believes that an appropriate annual interest rate on this investment is 4%. What is the present value of this uneven cash flow stream, rounded to the nearest whole dollar?

a) $450,000

b) $2025000

c) $1705489

d) $ 1675000

Russell Corporation sold a parcel of land valued at $517,500. Its basis in the land was $382,950. For the land, Russell received $72,750 in cash in year 0 and a note providing that Russell will receive $265,000 in year 1 and $179,750 in year 2 from the buyer (plus reasonable interest on the note). (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.)

What is Russell’s realized gain on the transaction?

What is Russell’s recognized gain in year 0, year 1, and year 2?

ABC is looking at purchasing a new machine. The new machine installed cost is $60,000 and requires minimal increase in NWC (net working capital). It will be sold at the end of year 3 for an anticipated $5,000. Use MACRS 3 yr. (Remember to add the terminal cash flow in when calculating year 3 OCF) Anticipated cash savings prior to depreciation: Year 1$20,000, Year 2 $30,000, Year 3 $20,000 Calculate the operating cash flows for each year. Tax Rate is 40%

An investment in the Bosworth Closed-end Fund produced the following results:

What is the time-weighted rate of return on an investment in this fund if you bought the investment at the end of Year 0 and held it until the end of Year 3? Report your answer to four decimal places (e.g., 1.234% report as 0.0123)

An investment project will cost the firm $200,000 now. The additional cash flows earned as a result of the investment are $30,000 in the first year; $50,000 in the second year; $75,000 in the third year; $90,000 in the fourth year; and $120,000 in the fifth year. After that, the investment results in no further increases in cash flows. Assuming cash flows are evenly distributed throughout the year, the payback period for this investment is ______.

A. five years

B. four years

C. three and a half years

D. We cannot answer this question without knowing the cost of capital.

1. You started your investment with an opening deposit of $1,000.  Your portfolio grew as follows:
   

1. What was your average return?  (Arithmetic average)
2. What was your actual return? (Geometric average)
3. Use the TVOM to calculate the Rate (R) using the End year 5 as your Future Value.  

PLEASE SHOW HOW THIS IS DONE IN EXCEL