Perkins Corporation is considering several investment proposals, as shown below:Investment requiredNet present valueA$128,000Investment ProposalBC$ 160,000$ 96,000$153,600$ 240,000$ 134,400If the profitability index is used, the ranking of the projects from most to least profitable would be:A, C, B, DD, B, C, AB, D, C, AB, D, A, CD$ 120,000$264,000

Step 1: Step 2: Step 3: Step 4:

Answered: Perkins Corporation is considering…

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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b) Calculate the profitability index (PI) of each project, assess its acceptability, and indicate which project is best using PI.
Net present value Using a cost of capital of 15%, calculate the net present value for the project shown in the following table and indicate whether it is acceptable, The net present value (NPV) of the project is $. (Round to the nearest cent.) Is the project acceptable? (Select the best answer below.) O Yes No Data table (Click on the icon here in order to copy the contents of the data table below a spreadsheet.) Initial investment (CF) Year (0) 1 2 3 4 5 6 7 8 9 10 -1,156,000 Cash inflows (CF) $75,000 $140,000 $192,000 $254,000 $313,000 $378,000 $271,000 $97,000 $49,000 $26,000
Question 1: Salalalh Methanol company management is considering three competing investment Projects A, B & C_ Year Initial Investment 1 Project A Project B Project C 12000 12000 12000 1200 3100 4150 5260 5225 8250 3800 7360 9275 9300 4 4600 9460 Assume a discount Rate of 5.45 % Use the information above and help the management in choosing the most desirable Project using Payback period, Discounted payback Net Present value and Profitability Index. Out of the four methods which is considered to be the most desirable. Explain
Pecos Corporation is considering several investment proposals, as shown below: Investment required Present value of future net Investment Proposal OD, B, C, A O B, D, C, A OB, D, A, C O A, C, B, D A B $ 80,000 $ 100,000 C $ 60,000 D $ 75,000 cash flows $ 96,000 $ 150,000 $ 84,000 $ 120,000 If the project profitability index is used, the ranking of the projects from most to least profitable would be:
Tr.22.
A company is considering a 4-year project with the following cash flows: C0 =-$20,000 C1 =C2 =C3 =C4 =$7,000 If the company’s opportunity cost of capital is 12%, then compute the following for the project: a) the project’s NPV b) the project’s IRR c) determine if the project will have more than 1 IRR d) The project’s PI e) Should the project be rejected because its payback period is longer than two years? f) Should the project be rejected because its IRR is greater than its required rate of return?
Put answer in table format Yokam Company is considering two alternative projects. Project 1 requires an initial investment of $560,000 and has a present value of cash flows of $2,200,000.0. Project 2 requires an initial investment of $5,000,000 and has a present value of cash flows of $7,000,000. 1. Compute the profitability index for each project.2. Based on the profitability index, which project should the company prefer?
Q3) Based on the information below which projects will we choose based on weighted average profitabiltity Index if we only have OMR500,000 to invest? Select one: Project NPV Investment PI A 130,000 200,000 B 241,250 225,000 C 294,250 275,000 D 262,000 250,000
Question 1: Salalalh Methanol company management is considering three competing investment Projects A, B & C Year Initial Investment Project A Project B 12000 4150 5260 Project C 12000 12000 1200 3100 5225 3 4 Assume a discount Rate of 5.45 % 3800 4600 7360 9460 8250 9275 9300 Use the information above and help the management in choosing the most desirable Project using Payback period
The senior management of Netherworld Ltd is evaluating four project proposals and will select one project to invest in. The following summary information is available: Project Code Initial Investment Required Net Present Value Project life (years) A 172,000 48,000 7 B 155,000 48,000 12 C 115,000 39,100 7 D 141,000 38,500 3 Required: Calculate the profitability index for each project. In order of preference, rank the four projects in terms of net present value and the profitability index. Which project do you think should be chosen?

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