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Dvinal [7]
3 years ago
14

Olinick Corporation is considering a project that would require an investment of $324,000 and would last for 8 years. The increm

ental annual revenues and expenses generated by the project during those 8 years would be as follows (Ignore income taxes.): Sales $ 200,000 Variable expenses 27,000 Contribution margin 173,000 Fixed expenses: Salaries 34,000 Rents 47,000 Depreciation 42,000 Total fixed expenses 123,000 Net operating income $ 50,000 The scrap value of the project's assets at the end of the project would be $24,000. The cash inflows occur evenly throughout the year. The payback period of the project is closest to: (
Business
1 answer:
mylen [45]3 years ago
5 0

Answer:

Payback period = 3.5 years

Explanation:

Net income                           $50,000.00

Add: Depreciation expense<u> $42,000.00</u>

Net annual cash inflow     <u>  $92,000.00</u>

Payback period = Initial investment / Annual cash inflows

= $324,000 / $92,000

= 3.5 years

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Explain the definition of Human Resources Management
Arlecino [84]

Answer:

Human resource management (HRM or HR) is the strategic approach to the effective management of people in a company or organization such that they help their business gain a competitive advantage. It is designed to maximize employee performance in service of an employer's strategic objectives. Human resource management is primarily concerned with the management of people within organizations, focusing on policies and systems. HR departments are responsible for overseeing employee-benefits design, employee recruitment, training and development, performance appraisal, and reward management, such as managing pay and Employee benefits benefit systems. HR also concerns itself with organizational change and industrial relations, or the balancing of organizational practices with requirements arising from collective bargaining and

Explanation:

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5 0
3 years ago
Which best describes an investor’s primary goal?
tigry1 [53]
An investors primary goal is to make money. More specifically, money that is greater than the sum amount initially invested.
9 0
3 years ago
Read 2 more answers
What is the opportunity coast in using pi over npv?
salantis [7]

<span>Topics Reference Advisors Markets Simulator Academy</span>  Profitability Index<span>By Investopedia</span><span> SHARE </span><span> </span><span>                                     Chapter One                                     Chapter Two                                     Chapter Three                                     Chapter Four                                     Chapter Five                              </span><span>Chapter One Chapter Two Chapter Three Chapter Four Chapter Five</span><span><span>4.1 Net Present Value And Internal Rate Of Return4.2 Capital Investment Decisions4.3 Project Analysis And Valuation4.4 Capital Market History4.5 Return, Risk And The Security Market Line</span><span>4.1.1 Introduction To Net Present Value And Internal Rate Of Return4.1.2 Net Present Value4.1.3 Payback Rule4.1.4 Average Accounting Return4.1.5 Internal Rate Of Return4.1.6 Advantages And Disadvantages Of NPV and IRR4.1.7 Profitability Index4.1.8 Capital Budgeting</span></span>
A profitability index attempts to identify the relationship between the costs and benefits of a proposed project. The profitability index is calculated by dividing the present value of the project's future cash flows by the initial investment. A PI greater than 1.0 indicates that profitability is positive, while a PI of less than 1.0 indicates that the project will lose money. As values on the profitability index increase, so does the financial attractiveness of the proposed project.

The PI ratio is calculated as follows:

<span>PV of Future Cash Flows
</span>Initial Investment

A ratio of 1.0 is logically the lowest acceptable measure for the index. Any value lower than 1.0 would indicate that the project's PV is less than the initial investment, and the project should be rejected or abandoned. The profitability index rule states that the ratio must be greater than 1.0 for the project to proceed.

For example, a project with an initial investment of $1 million and present value of future cash flows of $1.2 million would have a profitability index of 1.2. Based on the profitability index rule, the project would proceed. Essentially, the PI tells us how much value we receive per dollar invested. In this example, each dollar invested yields $1.20.

The profitability index rule is a variation of the net present value (NPV) rule. In general, if NPV is positive, the profitability index would be greater than 1; if NPV is negative, the profitability index would be below 1. Thus, calculations of PI and NPV would both lead to the same decision regarding whether to proceed with or abandon a project.

However, the profitability index differs from NPV in one important respect: being a ratio, it ignores the scale of investment and provides no indication of the size of the actual cash flows.

The PI can also be thought of as turning a project's NPV into a percentage rate.

(Find some profitable ideas in <span>8 Ways To Make Money With Real Estate</span> and Outside The Box Ways To Get Money.)
4 0
3 years ago
By investing in a John Deere PowerTech engine for $3,200, a pallet manufacturer was able to show a net savings of $500 in annual
Verizon [17]

Answer:

15.6%

Explanation:

Investment = $3200

Net savings = $500

Investment returns in % = Net savings/Investment × 100

= 500/3200 × 100

= 0.15625 × 100

= 15.6%

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4 years ago
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Marina CMI [18]

Answer:

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