Hanmi Group, a consumer electronics conglomerate, is reviewing its annual budget in wireless technology. It is...
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Hanmi Group, a consumer electronics conglomerate, is reviewing its annual budget in wireless technology. It is considering investments in three different technologies to develop wireless communication devices. Consider the following cash flows of the three independent projects available to the company. Assume the discount rate for all projects is 8 percent. Further, the company has only $27 million to invest in new projects this year. Cash Flows (in $ millions) Year CDMA G4 Wi-Fi 0 123 2 $ $ 27 11 18 25 33 39 4.5 27 27 a. CDMA G4 20 7.5 a. Calculate the profitability index for each investment. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b. Calculate the NPV for each investment. (Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to 2 decimal places, e.g., 1,234,567.89) Hanmi Group, a consumer electronics conglomerate, is reviewing its annual budget in wireless technology. It is considering investments in three different technologies to develop wireless communication devices. Consider the following cash flows of the three independent projects available to the company. Assume the discount rate for all projects is 8 percent. Further, the company has only $27 million to invest in new projects this year. Cash Flows (in $ millions) Year CDMA G4 Wi-Fi 0 123 2 $ $ 27 11 18 25 33 39 4.5 27 27 a. CDMA G4 20 7.5 a. Calculate the profitability index for each investment. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b. Calculate the NPV for each investment. (Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to 2 decimal places, e.g., 1,234,567.89)
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Answer rating: 100% (QA)
To calculate the profitability index PI for each investment we need to divide the present value of the cash flows by the initial investment The presen... View the full answer
Related Book For
Corporate Finance
ISBN: 978-0077861759
10th edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
Posted Date:
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