Fabulous Fabricators needs to decide how to allocate space in its production facility this year. It is considering the following contracts: Contract ABC NPV $2.04 million $0.98 million $1.52 million a. What are the profitability indexes of the projects? b. What should Fabulous Fabricators do? Use of Facility 100% 59% 41%
Fabulous Fabricators needs to decide how to allocate space in its production facility this year. It is considering the following contracts: Contract ABC NPV $2.04 million $0.98 million $1.52 million a. What are the profitability indexes of the projects? b. What should Fabulous Fabricators do? Use of Facility 100% 59% 41%
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
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Transcribed Image Text:Fabulous Fabricators needs to decide how to allocate space in its production facility this year. It is considering the
following contracts:
Contract
A
B
с
NPV
$2.04 million
$0.98 million
$1.52 million
a. What are the profitability indexes of the projects?
b. What should Fabulous Fabricators do?
a. What are the profitability indexes of the projects?
The profitability index for contract A is
Use of Facility
100%
59%
41%
(Round to two decimal places.)
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