ABC Company has two investment options Project A and Project B. Project A requires an initial investment of $500,000 and the expected present value of cash inflow from the project is $608,000. Project B requires an initial investment of $1,000,000 and the present value of cash inflows is $1,180,000. Assume that the company does not have any fund constraint to invest. Based on the given scenario, the profitability index for Project A is _____ and that for Project B is _____.
ABC Company has two investment options Project A and Project B. Project A requires an initial investment of $500,000 and the expected present value of cash inflow from the project is $608,000. Project B requires an initial investment of $1,000,000 and the present value of cash inflows is $1,180,000. Assume that the company does not have any fund constraint to invest. Based on the given scenario, the profitability index for Project A is _____ and that for Project B is _____.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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ABC Company has two investment options Project A and Project B. Project A requires an initial investment of $500,000 and the expected
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