Question
The treasurer of Tropical Fruits, Inc., has projected the cash flows of Projects A, B, and C as follows: Year Project A Project B Project
The treasurer of Tropical Fruits, Inc., 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.) b. Compute the NPV for each of the three projects. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) c. Suppose these three projects are independent. Which
project(s) should the company accept based on the profitability index rule? | |
multiple choice 1
Project A
Project B
Project C
Project A, Project B, Project C
Project A, Project B
Project A, Project C
Project B, Project C
d. | Suppose these three projects are mutually exclusive. Which project(s) should the company accept based on the profitability index rule? |
multiple choice 2
Project A
Project B
Project C
Project A, Project B, Project C
Project A, Project B
Project A, Project C
Project B, Project C
e. | Suppose the budget for these projects is $520,000. The projects are not divisible. Which project(s) should be accepted? |
multiple choice 3
Project A
Project B
Project C
Project A, Project B, Project C
Project B, Project C
Project B, Project A
Project A, Project C
Step 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