Question
A) You have the following information on a project's cash flows. The project's required rate is 12.5%. Year Cash flows 0 -$83,000 1 24,000 2
A) You have the following information on a project's cash flows. The project's required rate is 12.5%.
Year | Cash flows |
0 | -$83,000 |
1 | 24,000 |
2 | 28,000 |
3 | 36,000 |
4 | 81,000 |
The project's profitablity index is ____ . Round it to two decimal places.
B) A firm evaluates all of its projects by applying the IRR rule. The cash flows for a project is shown below and the firm requires 15% return on this type of project. First, compute the IRR of the project in box 1. (Do not include the percent sign (%). Round your answer to 2 decimal places. (e.g., 32.16)) Then, make the investment decision based on the IRR by inputing either "accept" or "reject" in box 2.
Year Cash Flow 0 $36,500 1 21,000 2 17,000 3 7,000
Please answer both parts if you are able to. I truly appreciate it because I really need the help. Thanks!
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