Question
Assume the following information for a capital budgeting proposal with a five-year time horizon: Initial investment: Cost of equipment (zero salvage value) $ 380,000 Annual
Assume the following information for a capital budgeting proposal with a five-year time horizon:
| Initial investment: | |
|---|---|
| Cost of equipment (zero salvage value) | $ 380,000 |
| Annual revenues and costs: | |
| Sales revenues | $ 300,000 |
| Variable expenses | $ 130,000 |
| Depreciation expense | $ 50,000 |
| Fixed out-of-pocket costs | $ 40,000 |
Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. Assuming a discount rate of 12%, this proposals profitability index is closest to:
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Business Accounting Volume 2
Authors: Frank Wood
4th Edition
0582413435, 978-0582413436
