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Blossom Co, is considering purchasing equipment that has an initial investment of $39000. The company's required rate of return is 12%. Annual cost savings are
Blossom Co, is considering purchasing equipment that has an initial investment of $39000. The company's required rate of return is 12%. Annual cost savings are projected to be $18000 for year 1, $14000 for year 2, and $13000 for year 3. What is the investment's profitability index? Present Value PV of an Annuity of 1 at 12% of 1 at 12% Year 1 0.893 0.893 2. 0.797 1.690 3 0.712 2.402 000 1.90. 1.94 1.88 0.94 Cullumber Co. purchased some equipment 3 years ago. The company's required rate of return is 12%, and the net present value of the project was $(900). Annual cost savings were: $10000 for year 1; $6000 for year 2; and $2000 for year 3. The amount of the initial investment was Present Value PV of an Annuity of 1 at 12% of 1 at 12% Year 1 0.893 0.893 2 0.797 1.690 3 0.712 2.402 $16036 $13512 $14236. $15312
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