Metlock, Inc. is considering purchasing equipment costing $78000 with a 6-year useful life. The equipment will provide annual cost savings of $19600 and will be depreciated straight-line over its useful life with no salvage value. Metlock requires a 10% rate of return. Present Value of an Annuity of 1 Period 8% 9% 10% 11% 12% 15% 6 4.623 4.486 4.355 4.231 4.111 3.784 What is the approximate profitability index associated with this equipment? O 1.25 O 0.73 O 1.06 O 1.09

Metlock, Inc. is considering purchasing equipment costing $78000 with a 6-year useful life. The equipment will provide annual cost savings of $19600 and will be depreciated straight-line over its useful life with no salvage value. Metlock requires a 10% rate of return. Present Value of an Annuity of 1 Period 8% 9% 10% 11% 12% 15% 6 4.623 4.486 4.355 4.231 4.111 3.784 What is the approximate profitability index associated with this equipment? O 1.25 O 0.73 O 1.06 O 1.09

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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