Blossom, Inc. is considering purchasing equipment costing $90000 with a 6-year useful life. The equipment will provide annual cost savings of $23000 and will be depreciated straight-line over its useful life with no salvage value. Blossom requires a 10% rate of return. Present Value of an Annuity of 1 Period 8% 10% 11% 12% 6 4.623 4.486 4.355 4.231 4.111 3.784 9% O 0.73 O 1.11 1.27 O 1.08 15% What is the approximate profitability index associated with this equipment?
Blossom, Inc. is considering purchasing equipment costing $90000 with a 6-year useful life. The equipment will provide annual cost savings of $23000 and will be depreciated straight-line over its useful life with no salvage value. Blossom requires a 10% rate of return. Present Value of an Annuity of 1 Period 8% 10% 11% 12% 6 4.623 4.486 4.355 4.231 4.111 3.784 9% O 0.73 O 1.11 1.27 O 1.08 15% What is the approximate profitability index associated with this equipment?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Account
![Blossom, Inc. is considering purchasing equipment costing $90000 with a 6-year useful life. The equipment will provide annual cost
savings of $23000 and will be depreciated straight-line over its useful life with no salvage value. Blossom requires a 10% rate of return.
Period 8%
6
Present Value of an Annuity of 1
9%
0.73
1.11
1.27
O 1.08
10% 11% 12% 15%
4.623 4.486 4.355 4.231 4.111 3.784
What is the approximate profitability index associated with this equipment?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F2dbf05e8-4609-48ee-b8a3-5dc8c1c2617c%2F59822be2-9b4b-47a0-b3c3-ec6a20d47796%2Fjbmiil_processed.png&w=3840&q=75)
Transcribed Image Text:Blossom, Inc. is considering purchasing equipment costing $90000 with a 6-year useful life. The equipment will provide annual cost
savings of $23000 and will be depreciated straight-line over its useful life with no salvage value. Blossom requires a 10% rate of return.
Period 8%
6
Present Value of an Annuity of 1
9%
0.73
1.11
1.27
O 1.08
10% 11% 12% 15%
4.623 4.486 4.355 4.231 4.111 3.784
What is the approximate profitability index associated with this equipment?
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