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Pharoah Co. is considering purchasing equipment that has an initial investment of $43000. The company's required rate of return is 12%. Annual cost savings are projected to be $19000 for year 1.$15000 for year 2, and $13000 for year 3. What is the investment's profitability index? Year 1 2 3 Present Value of 1 at 12% O 1.89. 089 185. O183 0.893 0.797 0.712 PV of an Annuity of 1 at 12% 0.893 1.690 2.402

Pharoah Co. is considering purchasing equipment that has an initial investment of $43000. The company's required rate of return is 12%. Annual cost savings are projected to be $19000 for year 1.$15000 for year 2, and $13000 for year 3. What is the investment's profitability index? Year 1 2 3 Present Value of 1 at 12% O 1.89. 089 185. O183 0.893 0.797 0.712 PV of an Annuity of 1 at 12% 0.893 1.690 2.402

Essentials Of Investments
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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Pharoah Co. is considering purchasing equipment that has an initial investment of $43000. The company's required rate of return is 12%. Annual cost savings are projected to be $19000 for year 1.$15000 for year 2, and $13000 for year 3. What is the investment's profitability index? Year 1 2 3 Present Value of 1 at 12% O 1.89. 0.89 O 185. O 183. 0.893 0.797 0.712 PV of an Annuity of 1 at 12% 0.893 1.690 2402
Transcribed Image Text:Pharoah Co. is considering purchasing equipment that has an initial investment of $43000. The company's required rate of return is 12%. Annual cost savings are projected to be $19000 for year 1.$15000 for year 2, and $13000 for year 3. What is the investment's profitability index? Year 1 2 3 Present Value of 1 at 12% O 1.89. 0.89 O 185. O 183. 0.893 0.797 0.712 PV of an Annuity of 1 at 12% 0.893 1.690 2402
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