Dawntreader Landscaping is considering purchasing $490,000 of new lawn equipment and they anticipate the additional equipment will result in cash flows as below. Their weighted average cost of capital is 10.30%. Year Cash flow 1 87,000 2 113,000 3 129,000 4 146,000 5 162,000 The profitability index for the project
Dawntreader Landscaping is considering purchasing $490,000 of new lawn equipment and they anticipate the additional equipment will result in cash flows as below. Their weighted average cost of capital is 10.30%. Year Cash flow 1 87,000 2 113,000 3 129,000 4 146,000 5 162,000 The profitability index for the project
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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Do not do any interim rounding, state your answer to two decimal places.
Dawntreader Landscaping is considering purchasing $490,000 of new lawn equipment and they anticipate the additional equipment will result in cash flows as below. Their weighted average cost of capital is 10.30%.
| Year | Cash flow |
| 1 | 87,000 |
| 2 | 113,000 |
| 3 | 129,000 |
| 4 | 146,000 |
| 5 | 162,000 |
The profitability index for the project is:
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