Question: We-Know-Widgets, Inc. is analyzing a project that requires an initial investment of $10,000, followed by cash inflows of $100 in year 1, $4,000 in year

We-Know-Widgets, Inc. is analyzing a project that requires an initial investment of $10,000, followed by cash inflows of $100 in year 1, $4,000 in year 2 and $15000 in year 3. The cost of capital is 10%. What is the profitability index of the project? A) 1.04 B) 1.55 C) 1.78 D) 1.97

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Q:

4 . Modified internal rate of return ( MIRR ) The IRR evaluation method assumes that cash flows from the project are reinvested at the same rate equal to the IRR. However, in reality the reinvested...

Q:

8. Modified internal rate of return (MIRR) The IRR evaluation method assumes that cash flows from the project are reinvested at the same rate equal to the IRR. However, in reality the reinvested cash...

Q:

Green Caterpillar Garden Supplies Inc. is analyzing a project that requires an initial investment of $ 4 0 0 , 0 0 0 . The project s expected cash flows are: Year Cash Flow Year 1 $ 3 5 0 , 0 0 0...

Q:

4. Modified internal rate of return (MIRR) The IRR evaluation method assumes that cash flows from the project are reinvested at the same rate equal to the IRR. However, in reality the reinvested cash...

Q:

This is the same problem but I just wanted to take another picture to show you the answer option for the blank. The IRR evaluation method assumes that cash flows from the project are reinvested at a...

Q:

Ch 10: Assignment - The Basics of Capital Budgeting: Evaluating Cash Flows The IRR evaluation method assumes that cash flows from the project are reinvested at the same rate equal to the IRR....

Q:

4. Modified internal rate of return (MIRR) The IRR evaluation method assumes that cash flows from the project are reinvested at the same rate equal to the IRR. However, in reality the reinvested cash...

Q:

4. Modified internal rate of return (MIRR) The IRR evaluation method assumes that cash flows from the project are reinvested at the same rate equal to the IRR. However, in reality the reinvested cash...

Q:

4. Modified internal rate of return (MIRR) The IRR evaluation method assumes that cash flows from the project are reinvested at the same rate equal to the IRR. However, in reality the reinvested cash...

Q:

Attempts: Average: 13 Attention: Due to a bug in Google Chrome, this page may not function correctly. Click here to learn more 4. Modified internal rate of return (MIRR) Aa Aa The IRR evaluation...

Q:

What are the composition and duties of Disciplinary Committee under SLB Cap 194 Establishment of Disciplinary Committee

Q:

A coil of 15 turns and radius 10.0 cm surrounds a long solenoid of radius 2.00 cm and 1.00 x 103 turns/meter (Fig P31.10) the current in the solenoid changes as I = (5.00 A) sin (120t). Find the...

Q:

evulate this answer idk which is right I need to carefully recalculate the NPV from scratch, making sure to use the correct values at each step. Let me recalculate Step 7: ### Step 7: Calculate the...

Q:

9. (15 points) A company is considering a new project that requires an investment of \$5 million. The project is expected to generate cash flows of $2 million in year 1,$3 million in year 2, and $4...

Q:

Prepare effective negative messages for a variety of purposes using the direct plan.

Q:

Write different kinds of persuasive messages using the indirect plan.

Q:

Distinguish between formal and informal reports.