1 answer

The management of Revco Products is exploring four different investment opportunities. Information on the four projects...

Question:

The management of Revco Products is exploring four different investment opportunities. Information on the four projects under study follows:

Project Number
1 2 3 4
Investment required $ (490,000 ) $ (440,000 ) $ (340,000 ) $ (410,000 )
Present value of cash inflows at a 12% discount rate 532,344 464,524 402,923 444,413
Net present value $ 42,344 $ 24,524 $ 62,923 $ 34,413
Life of the project 6 years 12 years 6 years 3 years
Internal rate of return 15 % 13 % 18 % 17 %

Because the company’s required rate of return is 12%, a 12% discount rate has been used in the present value computations above. Limited funds are available for investment, so the company can’t accept all of the available projects.

Required:

1. Compute the project profitability index for each investment project.

2. Rank the four projects according to preference, in terms of net present value, project profitability index and internal rate of return.


Answers

Profitability of Index = Net present Value / Investment Required Calculation of Profitability Index 2 490000 440000 42344 245

.

Similar Solved Questions

1 answer
Compare and contrast the difference between fraud prevention and fraud deterrence? Provide examples, TTT Arial 3...
Compare and contrast the difference between fraud prevention and fraud deterrence? Provide examples, TTT Arial 3 (12pt) TEE 5.02...
1 answer
7) An invention that raises the future marginal product of capital in a closed economy) would...
7) An invention that raises the future marginal product of capital in a closed economy) would cause an increase in desired investment, which would cause the investment curve to shift to the and would cause the real interest rate to A) right; increase B) right; decrease C) left: increase D) left: dec...
1 answer
The following please answer G.Odds ratio H.Risk ratio I. Absolute risk J. Attributable risk K. Population...
the following please answer G.Odds ratio H.Risk ratio I. Absolute risk J. Attributable risk K. Population attributable risk A. Descriptive study B. Case-control study C. Cohort study D. Cross-sectional study E. Ecological study F. Reference population Match the statement below with the terms above-e...
1 answer
Ellucian Ethos iden x 58 Homepage - Winter X m Vretta Sign In or Sign Up...
Ellucian Ethos iden x 58 Homepage - Winter X m Vretta Sign In or Sign Up X C Math PI ssignment/4111 Question 7 of 7 The Calvarusos have decided to invest in a college fund for their young son. They invested $40,000 in a deferred annuity that will pay their son at the beginning of every month for 4 y...
1 answer
3. Mount Everest rises to a height of 29,035 ft (8.850 x 109 m) above sea...
3. Mount Everest rises to a height of 29,035 ft (8.850 x 109 m) above sea level. At this height, the atmospheric pressure is 230 mm Hg. At what temperature does water boil at the summit of Mount Everest? (AHvap for H20 = 40.7 kJ/mole) a. -17°C b. 31°C c. 48°C d. 57°C e. 69°C...
1 answer
The infection control nurse has traced the spread of a nosocomial infection to a computer keyboard...
The infection control nurse has traced the spread of a nosocomial infection to a computer keyboard on a hospital unit. It is located in a work area adjacent to four patient rooms. This computer is routinely used by staff for documentation, to check laboratory and radiology results, and to access ref...
1 answer
Can pH levels go beyond 14?
Can pH levels go beyond 14?...
1 answer
An air-track glider is attached to a spring. The glider is pulled to the right and...
An air-track glider is attached to a spring. The glider is pulled to the right and released from rest at t=0 s. It then oscillates with a period of 1.9 s and a maximum speed of 35 cm/s. What is the amplitude of the oscillation? What is the glider's position at t = 0.25 s? (Measure relative to th...
1 answer
Reserve Problems Chapter 11 Section 2 Problem 1 The department of health studied the number of...
Reserve Problems Chapter 11 Section 2 Problem 1 The department of health studied the number of patients who need liver transplantation. The following data are the Liver Transplantation Waiting List (LTWL), where y is the size (in number of patients) and x is the corresponding year: y 1484 20743097 4...
1 answer
PLEASE COMPLETE IN C++ LANGUAGE Location row : int = -1 col : int = -1...
PLEASE COMPLETE IN C++ LANGUAGE Location row : int = -1 col : int = -1 setLocation(row : int, col : int) getRow(): int getColl): int isEmpty(): bool Details Write all the code necessary to implement the Location class as shown in the UML Class Diagram to the right. Do this in a project named snake (...
1 answer
We were unable to transcribe this image12. Bill Cigarettes acquired a bad habit of smoking in...
We were unable to transcribe this image12. Bill Cigarettes acquired a bad habit of smoking in high school, Bill spends approximately $70 a month or 3840 a year on cigarettes. He is not concerned with health issues, but he is keenly aware of financial issues. Show Bil how much he would have at retire...
1 answer
An electric device draws 7.10 A at 240 V. If the voltage drops by 35 %,...
An electric device draws 7.10 A at 240 V. If the voltage drops by 35 %, what will be the current, assuming nothing else changes? Express your answer to two significant figures and include the appropriate units. ЦА ? I final = 2.7 A Submit Previous Answers Request Answer X Incorrect; Try ...
1 answer
Chapter 6 ExercisesX+ :0.5640399510776057 1523818424733 Wingate Company, a wholesale distributor of electronic equipment, has been experiencing...
Chapter 6 ExercisesX+ :0.5640399510776057 1523818424733 Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, as shown by its most recent monthly contribution format income statement, which follows Sales Variable expenses $ 1,687,000 564,690 Co...
1 answer
Center Sports is considering a new automated maintenance machine that will lower costs by $468,396 per...
Center Sports is considering a new automated maintenance machine that will lower costs by $468,396 per year. The machine costs $950,806 and will be depreciated straight line to zero over the 3 year life of the equipment. If Center is taxed at a rate of 27%, what is the operating cash flow associated...
1 answer
FILE HOME INSERT P AGE LAYOUT FORMULAS DATA REVIEW VIEW Sign In Calibri 11 AÁ -...
FILE HOME INSERT P AGE LAYOUT FORMULAS DATA REVIEW VIEW Sign In Calibri 11 AÁ - A Paste B I U , Alignment Number Cells Editing Conditional Format as Cell Formatting Table Styles Styles Clipboard Font X A1 for To aid in planning, Jay Corporation is preparing a contribution format income o aid ...
1 answer
Data Performance, a computer software consulting company, has three major functional areas: computer programming, information systems...
Data Performance, a computer software consulting company, has three major functional areas: computer programming, information systems consulting, and software training. Carol Bingham, a pricing analyst, has been asked to develop total costs for the functional areas. These costs will be used as a gui...