Answered step by step
Verified Expert Solution
Question
1 Approved Answer
PLEASE HELP!! Ibez Company is considering a project that requires an initial investment of $65,200 and will generate net cash flows of $18,000 per year
PLEASE HELP!!
Ibez Company is considering a project that requires an initial investment of $65,200 and will generate net cash flows of $18,000 per year for 6 years. Ibez requires a return of 10% on its investments. The present value factor of an annuity for 6 years at 10% is 4.3553. a. Compute the net present value of the project. b. Determine whether the project should be accepted or rejected on the basis of net present value. Complete this question by entering your answers in the tabs below. Required A Required B Compute the net present value of the project. (Negative Net present value amounts should be indicated with a minus sign.) Net Cash Flows Present Value of Annuity at 9% Present Value of Net Cash Flows Years 1-6 = $ 0 = II Net present value = Required A Required B > The profitability indexes for three alternative investment projects follow. Each project has a five-year life. (a) Which project(s) will the company accept on the basis of profitability index? (6) If the company can choose only one project, which will it choose? Potential Projects Profitability index Project A Project B 1.35 1.50 Project C 0.90 (a) Which project(s) will the company accept on the basis of profitability index? (b) If the company can choose only one project, which will it chooseStep by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started