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Concord Co. is considering purchasing equipment that has an initial investment of $45000. The company's required rate of return is 12%. Annual cost savings are projected to be $18000 for year 1, $15000 for year 2, and $10000 for year 3. What is the investment's profitability index? Present Value Year of 1 at 12% PV of an Annuity of 1 at 12% 1 0.893 0.893 2 0.797 1.690 3 0.712 2.402 0.78. 1.74. 1.78. ○ 1.72.

Concord Co. is considering purchasing equipment that has an initial investment of $45000. The company's required rate of return is 12%. Annual cost savings are projected to be $18000 for year 1, $15000 for year 2, and $10000 for year 3. What is the investment's profitability index? Present Value Year of 1 at 12% PV of an Annuity of 1 at 12% 1 0.893 0.893 2 0.797 1.690 3 0.712 2.402 0.78. 1.74. 1.78. ○ 1.72.

FINANCIAL ACCOUNTING
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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Concord Co. is considering purchasing equipment that has an initial investment of $45000. The company's required rate of return is 12%. Annual cost savings are projected to be $18000 for year 1, $15000 for year 2, and $10000 for year 3. What is the investment's profitability index? Present Value Year of 1 at 12% PV of an Annuity of 1 at 12% 1 0.893 0.893 2 0.797 1.690 3 0.712 2.402 0.78. 1.74. 1.78. ○ 1.72.
Transcribed Image Text:Concord Co. is considering purchasing equipment that has an initial investment of $45000. The company's required rate of return is 12%. Annual cost savings are projected to be $18000 for year 1, $15000 for year 2, and $10000 for year 3. What is the investment's profitability index? Present Value Year of 1 at 12% PV of an Annuity of 1 at 12% 1 0.893 0.893 2 0.797 1.690 3 0.712 2.402 0.78. 1.74. 1.78. ○ 1.72.
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