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Assume that a company is considering a capital investment project with a four-year time horizon and the following cash flows: Cost of new equipment $
Assume that a company is considering a capital investment project with a four-year time horizon and the following cash flows: Cost of new equipment $ 210,000 Working capital required $ 50,000 Annual net cash inflows $ 100,000 Maintenance and repairs in third year $ 40,000 Salvage value of equipment in fourth year $ 30,000 Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. Assuming the companys required rate of return is 12%, the profitability index of the project is closest to
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