Question
Please answer fully and show EXCEL formula Consider the following cash flows of two mutually exclusive projects for Tokyo Rubber Company. Assume the discount rate
Please answer fully and show EXCEL formula
| Consider the following cash flows of two mutually exclusive projects for Tokyo Rubber Company. Assume the discount rate for both projects is 12 percent. |
| The treasurer of Amaro Canned Fruits, Incorporated, has projected the cash flows of Projects A, B, and C as follows: |
| Year | Project A | Project B | Project C |
|---|---|---|---|
| 0 | $ 195,000 | $ 325,000 | $ 195,000 |
| 1 | 145,000 | 238,000 | 155,000 |
| 2 | 145,000 | 238,000 | 125,000 |
| Suppose the relevant discount rate is 12 percent per year. |
| a. | Compute the profitability index for each of the three projects. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) |
| Year | Dry Prepreg | Solvent Prepreg |
|---|---|---|
| 0 | $ 1,800,000 | $ 800,000 |
| 1 | 1,110,000 | 425,000 |
| 2 | 920,000 | 700,000 |
| 3 | 760,000 | 410,000 |
| a. | What is the payback period for both projects? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) |
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Financial management theory and practice
Authors: Eugene F. Brigham and Michael C. Ehrhardt
13th edition
1439078106, 111197375X, 9781439078105, 9781111973759, 978-1439078099
