Coore Manufacturing has the following twopossible projects. The required return is 13 percent.Year Project Y Project Z 0 -$ 28,600 -$51,000 1 14,600 14,000 2 13,000 37,000 3 15,400 12,0What is the profitability index for each project?Note: Do not round intermediate calculations andround your answers to 3 decimal places, e.g32.161. What is the NPV for each project? Note:Do not round intermediate calculations and roundyour answers to 2 decimal places, e.g., 32.16.Which, if either, of the projects should thecompany accept?

Let's calculate the profitability index and NPV for each project and then determine which project,…

Answered: Coore Manufacturing has the following…

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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The Michner Corporation is trying to choose between the following two mutually exclusive design projects: Year Cash Flow (I) 0 -$ 82,000 1 37,600 2 37,600 37,600 Cash Flow (II) -$ 21,700 11, 200 11,200 11, 200 a-1. If the required return is 10 percent, what is the profitability index for each project? Note: Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161. a-2. If the required return is 10 percent and the company applies the profitability index decision rule, which project should the firm accept? b-1. If the required return is 10 percent, what is the NPV for each project? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. b-2. If the company applies the NPV decision rule, which project should it take? a-1. Project I Project II a-2. Project acceptance b-1. Project I Project II b-2. Project acceptance
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The Yoo Corporation is trying to choose between the following two mutually exclusive design projects: 2 points Year Cash Flow (I) Cash Flow (II) 0 -$ 65,000 -$ 17,900 1 30,000 9,650 2 3 9,650 9,650 Mc Graw Hill 30,000 30,000 a-1. If the required return is 12 percent, what is the profitability index for both projects? Note: Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161. × Answer is complete but not entirely correct. Project I Project II 1.331 x 1.236 × a-2. If the company applies the profitability index decision rule, which project should the firm accept? Project I Project II b-1. What is the NPV for both projects? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. × Answer is complete but not entirely correct. Project I $ 15,357.13 x Project II $ 7,948.20 x < Prev 1 of 1 Next
The Michner Corporation is trying to choose between the following two mutually exclusive design projects: Year Cash Flow (1) Cash Flow (II) -$ -$ 0 55,000 1 25,000 2 25,000 3 25,000 a-1. If the required return is 10 percent, what is the profitability index for both projects? (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.) Project I Project II 18,900 10,150 10,150 10,150 a- If the company applies the profitability index decision rule, which project should the 2. firm accept? Project I O Project II Project I Project II 1. b- What is the NPV for both projects? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
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