Profitability index: Profitability index is a technique, which is used to rank the proposals of the business. It is used by the management when the business has more investment proposals and limited fund. The Profitability index is computed as follows: Profitability index = Total present value of net cash flow Amount to be invested To discuss: Advantages of profitability index over the direct comparison of net present value .

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Question

Chapter 12, Problem 10Q

To determine

Profitability index:

Profitability index is a technique, which is used to rank the proposals of the business. It is used by the management when the business has more investment proposals and limited fund.

The Profitability index is computed as follows:

Profitability index =Total present value of net cash flowAmount to be invested

To discuss: Advantages of profitability index over the direct comparison of net present value.

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Answer 2

Question

Chapter 12, Problem 10Q

To determine

Profitability index:

Profitability index is a technique, which is used to rank the proposals of the business. It is used by the management when the business has more investment proposals and limited fund.

The Profitability index is computed as follows:

Profitability index =Total present value of net cash flowAmount to be invested

To discuss: Advantages of profitability index over the direct comparison of net present value.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 12, Problem 10Q

To determine

Profitability index:

Profitability index is a technique, which is used to rank the proposals of the business. It is used by the management when the business has more investment proposals and limited fund.

The Profitability index is computed as follows:

Profitability index =Total present value of net cash flowAmount to be invested

To discuss: Advantages of profitability index over the direct comparison of net present value.

Expert Solution & Answer

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Check out a sample textbook solution

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Answer 4

Question

Chapter 12, Problem 10Q

To determine

Profitability index:

Profitability index is a technique, which is used to rank the proposals of the business. It is used by the management when the business has more investment proposals and limited fund.

The Profitability index is computed as follows:

Profitability index =Total present value of net cash flowAmount to be invested

To discuss: Advantages of profitability index over the direct comparison of net present value.

Expert Solution & Answer

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Answer 5

Chapter 12, Problem 10Q

To determine

Profitability index:

Profitability index is a technique, which is used to rank the proposals of the business. It is used by the management when the business has more investment proposals and limited fund.

The Profitability index is computed as follows:

Profitability index =Total present value of net cash flowAmount to be invested

To discuss: Advantages of profitability index over the direct comparison of net present value.

Answer 6

Chapter 12, Problem 10Q

To determine

Profitability index:

Profitability index is a technique, which is used to rank the proposals of the business. It is used by the management when the business has more investment proposals and limited fund.

The Profitability index is computed as follows:

Profitability index =Total present value of net cash flowAmount to be invested

To discuss: Advantages of profitability index over the direct comparison of net present value.

Answer 7

Chapter 12, Problem 10Q

To determine

Profitability index:

Profitability index is a technique, which is used to rank the proposals of the business. It is used by the management when the business has more investment proposals and limited fund.

The Profitability index is computed as follows:

Profitability index =Total present value of net cash flowAmount to be invested

To discuss: Advantages of profitability index over the direct comparison of net present value.

Answer 8

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Answer 10

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Answer 11

Ch. 12 - Prob. 1Q Ch. 12 - Prob. 2Q Ch. 12 - Tom Wells claims the formula for the cash payback...Ch. 12 - Prob. 4Q Ch. 12 - What is the decision rule under the net present...Ch. 12 - Discuss the factors that determine the appropriate...Ch. 12 - What simplifying assumptions were made in the...Ch. 12 - What are some examples of potential intangible...Ch. 12 - What steps can be taken to incorporate intangible...Ch. 12 - Prob. 10Q

Solution Summary: The author explains the advantages of profitability index over the direct comparison of net present value.

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Chapter 12 Solutions