Profitability Index: It is similar to the NPV method to evaluate a project. It calculates the ratio between the present value cash inflow and present value of cash outflow . A project should be accepted if it has a profitability index greater than or equal to 1. The formula to calculate the Profitability Index is as follows: P r o f i t a b i l i t y i n d e x = P r e s e n t v a l u e c a s h i n f l o w P r e s e n t v a l u e o f c a s h o u t f l o w To indicate: The Priority ranking of the projects on the basis of profitability index.

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Answer 1

Question

Chapter 11, Problem 12ME

To determine

Concept introduction:

Profitability Index:

It is similar to the NPV method to evaluate a project. It calculates the ratio between the present value cash inflow and present value of cash outflow. A project should be accepted if it has a profitability index greater than or equal to 1. The formula to calculate the Profitability Index is as follows:

Profitability index=Present value cash inflowPresent value of cash outflow

To indicate:

The Priority ranking of the projects on the basis of profitability index.

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Answer 2

Question

Chapter 11, Problem 12ME

To determine

Concept introduction:

Profitability Index:

It is similar to the NPV method to evaluate a project. It calculates the ratio between the present value cash inflow and present value of cash outflow. A project should be accepted if it has a profitability index greater than or equal to 1. The formula to calculate the Profitability Index is as follows:

Profitability index=Present value cash inflowPresent value of cash outflow

To indicate:

The Priority ranking of the projects on the basis of profitability index.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 11, Problem 12ME

To determine

Concept introduction:

Profitability Index:

It is similar to the NPV method to evaluate a project. It calculates the ratio between the present value cash inflow and present value of cash outflow. A project should be accepted if it has a profitability index greater than or equal to 1. The formula to calculate the Profitability Index is as follows:

Profitability index=Present value cash inflowPresent value of cash outflow

To indicate:

The Priority ranking of the projects on the basis of profitability index.

Expert Solution & Answer

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Answer 4

Question

Chapter 11, Problem 12ME

To determine

Concept introduction:

Profitability Index:

It is similar to the NPV method to evaluate a project. It calculates the ratio between the present value cash inflow and present value of cash outflow. A project should be accepted if it has a profitability index greater than or equal to 1. The formula to calculate the Profitability Index is as follows:

Profitability index=Present value cash inflowPresent value of cash outflow

To indicate:

The Priority ranking of the projects on the basis of profitability index.

Expert Solution & Answer

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Answer 5

Chapter 11, Problem 12ME

To determine

Concept introduction:

Profitability Index:

It is similar to the NPV method to evaluate a project. It calculates the ratio between the present value cash inflow and present value of cash outflow. A project should be accepted if it has a profitability index greater than or equal to 1. The formula to calculate the Profitability Index is as follows:

Profitability index=Present value cash inflowPresent value of cash outflow

To indicate:

The Priority ranking of the projects on the basis of profitability index.

Answer 6

Chapter 11, Problem 12ME

To determine

Concept introduction:

Profitability Index:

It is similar to the NPV method to evaluate a project. It calculates the ratio between the present value cash inflow and present value of cash outflow. A project should be accepted if it has a profitability index greater than or equal to 1. The formula to calculate the Profitability Index is as follows:

Profitability index=Present value cash inflowPresent value of cash outflow

To indicate:

The Priority ranking of the projects on the basis of profitability index.

Answer 7

Chapter 11, Problem 12ME

To determine

Concept introduction:

Profitability Index:

It is similar to the NPV method to evaluate a project. It calculates the ratio between the present value cash inflow and present value of cash outflow. A project should be accepted if it has a profitability index greater than or equal to 1. The formula to calculate the Profitability Index is as follows:

Profitability index=Present value cash inflowPresent value of cash outflow

To indicate:

The Priority ranking of the projects on the basis of profitability index.

Answer 8

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Answer 9

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Answer 10

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Answer 11

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Solution Summary: The author explains that the Profitability Index is similar to the NPV method to evaluate a project.

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