Question: Please need help for these questions Problem 8.6 Profitability Index (L03) The following are the cash flows of two projects: Year Project Project B 0
Please need help for these questions



Problem 8.6 Profitability Index (L03) The following are the cash flows of two projects: Year Project Project B 0 5 (240) (240) 1 120 140 2 120 140 3 120 140 4 120 If the opportunity cost of capital is 12%, what is the profitability Index for each project? (Do not round intermediate calculations. Round your answers to 4 decimal places.) Project A B Profitability Index 1.3017 1.4011 Problem 8-25 Profitability Index versus NPV (LO3) Consider projects A and B with the following cash flows: co -38 - 63 C +522 + 32 C2 #522 + 32 B 522 + 32 1-1. What is the NPV of each project if the discount rate is 16%? (Do not round intermediate calculations. Round your answers to 2 decimal places.) a-2. Which project has the higher NPV? b-1. What is the profitability index of each project? (Do not round Intermediate calculations. Round your answers to 2 decimal places) b 2. Which project has the higher profitability Index? c. Which project is most attractive to a firm that can raise an unlimited amount of funds to pay for its investment projects? d. Which project is most attractive to a firm that is limited in the funds it can raise? Project A Project B a-1. NPV of each project of the discount rate is 16% 3-2. Which project has the higher NPV? b-1. Profitability index of each project b-2. Which project has the higher profitability index? Which project is most attractive to a firm that can raise an unlimited amount of funds to pay for its Investment projects? 4. Which project is most attractive to a firm that is limited in the funds it can raise? c. Problem 8-33 Equivalent Annual Annuity (LOS) A firm can lease a truck for 4 years at a cost of $35,000 annually. It can instead buy a truck at a cost of $85,000, with annual maintenance expenses of $15,000. The truck will be sold at the end of 4 years for $25,000. a. What is the equivalent annual cost of buying and maintaining the truck if the discount rate is 12%7 (Do not round Intermediate calculations. Round your answer to 2 decimal places.) Equivalent annual cont 25,848,93 b. Which is the better option? Buy Lease
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