Homework #6D (Profitability Index)

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University of Maryland, University College *

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330 7980

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Finance

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Jan 9, 2024

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docx

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4

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Question 1 (1 point) Saved Find the profitability index (P1) for the following series of future cash flows, assuming the company's cost of capital is 12.48 percent. The initial outlay is $367.469. Year 1: $196,414 Year 2: $164,545 Year 3: $137,618 Year 4: $132,113 Year 5: $129,419 Round the answer to two decimal places. Your Answer: 151 Answer v = =y 5| Insett AutoSum Recently Financial Logical Text Date& Lookup® Math& More Name Function ~ Usedv ~ ~ ~ Time~ Reference~ Trigv Functions~ | Manager BG Fundtion Library De AL v fe || =NPV(12.48%,19641,164545,137618,132113,129419)/367469 8 | ¢ | o | E | F | 6 | H [
Question 2 (1 point) Saved Gold Mining, Inc. is using the profitability index (PI) when evaluating projects. Gold Mining’s cost of capital is 7.72 percent. What is the Pl of a project if the initial costs are $2,145,971 and the project life is estimated as 7 years? The project will produce the same after-tax cash inflows of $427.,890 per year at the end of the year. Round the answer to two decimal places. Your Answer: 109 Answer AKX e @ Insert AutoSum Recently Financial Logical Text Date& Lookup& Math & Function |~ Used~ > - ~ Time~ Reference~ Trig~ Fu Fundtion Library AL = fe | =PV(7.72%,7,427890,0,0)/2145971 B | ¢ | D E | F | &6 NSNS
Question 3 (1 point) Saved Good Morning Food, Inc. is using the profitability index (PI) when evaluating projects. You have to find the Pl for the company’s project, assuming the company’s cost of capital is 9.91 percent. The initial outlay for the project is $455,860. The project will produce the following end-of-the-year after-tax cash inflows of Year 1: $157,738 Year 2: $198,689 Year 3: $297,289 Year 4: $279,135 Round the answer to two decimal places. Your Answer: 1.60 Answer K o E NG Y B < Insert | AutoSum Recently Financial Logical Text Date& Lookup& Math& More Nar Function v Used v ~ ~ ~ Time~ Reference~ Trig~ Functions~ | Mani Function Library Al M fe | =NPV(9.91%,157738,198689,297289,279135)/455860 4 A [ c D E F G H s159 ] s [=
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Question 4 (1 point) Saved Aproject has an initial outlay of $1,784. It has a single payoff at the end of year 5 of $9,548. What is the profitability index (PI) of the project, if the company’s cost of capital is 12.73 percent? Round the answer to two decimal places. Your Answer: 3.00 Answer D o E Insert | AutoSum Recently Financial Logical Text Date& Lookup& Mat Function v Usedv v - ~ Time~ Reference~ Ty Function Library AL M fe | =PV(12.73%,5,0,9548,0)/1784 4 A 8 c D £ F (Sz.sa)l