Oceanic Airlines is considering installing new entertainment consoles into their air liners. Their initial proposal has a

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Oceanic Airlines is considering installing new entertainment consoles into their air liners. Their initial proposal has a cost of $280,000 and will bring increased operating cash flows of $ 190,000 for three years. The company's opportunity cost of capital is 13%. The firm also has a limited investment budget and is considering an alternative project with a profitability index of $0.50.

What is the profitability index of the initial proposal and which one should the firm choose?

Related Book For answer-question

Financial Reporting Financial Statement Analysis and Valuation a strategic perspective

ISBN: 978-1337614689

9th edition

Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

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Posted Date: Jul 05, 2023 05:44 AM

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Oceanic Airlines is considering installing new entertainment consoles into their air liners. Their initial proposal has a

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Financial Reporting Financial Statement Analysis and Valuation a strategic perspective

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