Question: A cookie bakery is thinking of buying hybrid electric vehicles which allow them to deliver fresh hot cookies which cost $40,000. The vehicles are expected to save the company money in gas and earn an extra profit totaling $11,000 per year for 6 years. After that, the cars will need to be replaced. Their current cost of capital is 6.5%. What is the profitability index of this project? a. 1.65 b. 13.25 c. 3.64 d. 1.33 e. None of these
Question: A cookie bakery is thinking of buying hybrid electric vehicles which allow them to deliver fresh hot cookies which cost $40,000. The vehicles are expected to save the company money in gas and earn an extra profit totaling $11,000 per year for 6 years. After that, the cars will need to be replaced. Their current cost of capital is 6.5%. What is the profitability index of this project? a. 1.65 b. 13.25 c. 3.64 d. 1.33 e. None of these
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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