Question
1. What is the profitability index of a project with an initial cost of $230,000 and three annual inflows of $210,000? Assume a cost of
1. What is the profitability index of a project with an initial cost of $230,000 and three annual inflows of $210,000? Assume a cost of capital of 9% and inflows starting one year from today.
Enter your answer as a number rounded to 4 decimal places. An answer of 23.45678 would be entered as 23.4568.
2. A new machine has an initial cost today of $13,000 and an annual cost of maintenance of $8,000 at the end of each year for the next 10 years. If the discount rate is 6%, what is the equivalent annual cost of the machine?
Enter your answer as a number rounded to 2 decimal places. An answer of 23.456 would be entered as 23.46.
3. A perpetuity pays $1,762 at the end of each year. If the discount rate is 15%, what is the present value of the perpetuity?
Enter your answer as a number rounded to 2 decimal places. An answer of 23.456 would be entered as 23.46.
4. A project has an initial cost of $147,495 and cash inflows at the end of each year of $22,758. What is the payback period for this project?
Enter your answer as a number rounded to 2 decimal places. An answer of 23.456 would be entered as 23.46.
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