Question
5. Mary Bighairis considering investing in a beautysalonthat will cost her $18,000. The after-tax cash flows on the investment should be about $4,000 per year
5. Mary Bighairis considering investing in a beautysalonthat will cost her $18,000. The after-tax cash flows on the investment should be about $4,000 per year for the next 5 years. Her opportunity cost of capital is 10.2 percent. Find the Profitability Index (PI) of buying the beauty salon:
(Do not round intermediate calculations; round final answer to four decimals, i.e. 123.4567)
Answer:______________
6.Based on the Profitability Index (PI)results you obtained in the previous question,is the beauty salona good investment?Why or why not? Explain fully.
Answer: _______________
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Business Forecasting
Authors: John E. Hanke, Dean Wichern
9th edition
132301202, 978-0132301206
