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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?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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?
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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