a profitability index (PI) of 1.45 indicates the project generates $0.45 of internal rate of return for every S100 invested plus is expected to earn therequired rate of return.true/ialse

Solution Concept Profitability index is mathematically expressed as =present value of inflow/…

Answered: a profitability index (PI) of 1.45…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Similar questions

The following are two projects a firm is considering: Project B Cash Flow Year 0 1 2 3 4 $2,939.01 Assuming that the relevant cost of capital for both projects is 11%, you should be able to determine the net present value (NPV) and the internal rate of return (IRR) for both project. Assume now that the firm has capital rationing, but knows that its true reinvestment rate is 20%, while its cost of capital is 11 percent. Given this information, determine the modified net present value (MNPV) for Project B. O $2.479.00 O $2.965.10 O$3.479.89 Project A Cash Flow O $4,084.05 ($10,000.00) ($11,000.00) $3,000.00 $5,000.00 $4,000.00 $4,000 00 $5,000.00 $4,000.00 $2,000.00 $2,000.00
a. Find the expected return for each project. b. Find the proportion of funds in each project to achieve an expected portfolio return of 20%. (c) Calculate the correlation coefficient between projects A and B. d) Find the portfolio risk.
The five alternatives shown below are being evaluated by the rate of return method. Incremental ROR when compared with alternative B C D 27.3 9.4 35.3 25 E 1.5 38.5 24.4 Alt B D E Initial Invest, $ ROR vs DN,% 9.6 15.1 -25,000 -35,000 -40,000 -60,000 -75,000 13.4 25.4 20.2 A --- --- (d) Alt D 46.5 27.3 6.8 ... If the projects are mutually exclusive and the Minimum Attractive Rate of Return is 9.2% per year, the best alternative is: (a) Alt A (b) Alt B (c) Alt C (e) Alt E
21. Write an equation for the toral expected return on tne investment the information using. Sir below. Std Dev. = 22 Min Ininas Investment=3000 subsequent investment= $ 50/mon. Rate of retum= 12%
LEI has the following investment opportunities that are average-risk projects for the firm: Project A B C D E Cost at t = 0 $10,000 20,000 10,000 20,000 10,000 Rate of Return 16.4% 15.0% 13.2% 12.0% 11.5% Which projects should LEI accept? Why?
Determine, using Capital Assets Pricing Model (CAPM), the Expected Rate of Return Risk free rate was 10% and Market return was 15% Asset K : return 21%, Beta, 2.5
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Please slove the question shown in the image. Calculating the rate of return on investment. Please show basic steps of how you derived the answer.
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a profitability index (PI) of 1.45 ndcates the project generates S0.45 of internal rate of return for every S100 invested plus is expected to earn the required rate of return. true/false