Question
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 | $ | 195,000 | |
| 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 15%, the profitability index of the project is closest to:
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Principles Of Food Beverage And Labor Cost Controls
Authors: Paul R. Dittmer, J. Desmond Keefe III
9th Edition
0471783471, 978-0471783473
