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Alex73 [517]
3 years ago
6

The following information is provided by Doppler SystemsProject A Project B Project C Project DInitial investment $426,000 $214,

000 $558,000 $516,000PV of cash inflows $584,000 $382,000 $806,000 $390,000Payback period (years) 3.6 3.2 4.0 2.0NPV of project $158,000 $168,000 $248,000 $126,000Calculate the profitability index for Project A. (Round your answer to two decimal places.)
Business
1 answer:
larisa86 [58]3 years ago
4 0

Answer:

The profitability index for Project A is 1.37

Explanation:

Since in the question, the NPV amount is given for all projects through which we can compute the profitability index. The formula to calculate the profitability index is computed by two methods which are shown below:

Profitability index for Project A equals to

Method 1

= Initial investment of Project A + NPV of project A ÷  Initial investment of Project A

= $426,000 + $158,000 ÷ $426000

= $584,000 ÷ $426,000

= 1.37

Method 2

= Present values of project A ÷  Initial investment of Project A

= $584,000 ÷ $426,000

= 1.37

The payback period is irrelevant. Thus, it is ignored.

Hence, the profitability index for Project A is 1.37

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Answer:

Accounting profit - Your actual profit

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Accounting profit is how much you made (Revenue - Explicit Cost.

Economic profit includes implicit costs, or opportunity cost. If you could have made $100,000 at a different job, you subtract that. If Accounting-Economic profit is 0 or higher, you should stay in business.

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Last month when Holiday Creations, Inc., sold 44,000 units, total sales were $308,000, total variable expenses were $215,600, an
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3 years ago
The basic premise of​ ______ is that firms should establish objectives and evaluate strategies on criteria other than using only
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D, balanced scorecard

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3 0
3 years ago
. El Capitan Foods has a capital structure of 36% debt and 64% equity, its tax rate is 35%, and its beta (leveraged) is 1.4. Bas
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Answer:

The firm's unleveraged beta is 1.0251

Explanation:

Hamada's equation  is used to separate the financial risk of a levered firm from its business risk.

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3 years ago
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