Give true answer this accounting question You are considering a projectwith an initial cash outlay of60,000 lira and expected freecash flows of 20,000 lira at theend of each year for 5 years. Therequired rate of return for thisproject is 12%. Calculate theproject's profitability index.

Step 1: Introduction to the Profitability IndexThe profitability index of a project denotes the…

Answered: You are considering a project with an…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section: Chapter Questions

Problem 1P

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(Payback period, net present value, profitability index, and internal rate of return calculations). You are considering a project with an initial cash outlay of$80,000 and expected free cash flows of$20,000 at the end of each year for six years. The required rate of return for this project is 10 percent. What are the project's payback and discounted payback periods? What is the project's NPV? What is the project's PI?
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Suppose that a project requires an initial investment of 20 000 USD at the begynning of year 1. The project is expected to return 25 000 USD at the end of year 1. The required rate of return for the project is 20%. Calcualte the Net Present Value of the project as well as the Internal Rate of Return.
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(Paybackperiod, NPV, PI, and IRR calculations) You are considering a project with an initial cash outlay of $80,000 and expected free cash flows of $26,000 at the end of each year for 6 years. The required rate of return for this project is 7 percent. a. What is the project's payback period? b. What is the project's NPV? c. What is the project's PI? d. What is the project's IRR?
(Net present value, profitability index, and internal rate of return calculations). You are considering two independent projects, project A and project B. The initial cash outlay associated with project A is $50,000 and the initial cash outlay associated with project B is $70,000. The required rate of return on both projects is 12 percent. The expected annual free cash flows from each project are as follows: YEAR PROJECT A PROJECT B 0 -$50,000 -$70,000 1 12,000 13,000 2 12,000 13,000 3 12,000 13,000 4 12,000 13,000 5 12,000 13,000 6 12,000 13,000 Calculate the NPV, PI, and IRR for each project and indicate if the project should be accepted.
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You are considering a project with an initial cash outlay of 60,000 lira and expected free cash flows of 20,000 lira at the end of each year for 5 years. The required rate of return for this project is 12%. Calculate the project's profitability index.