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A company is considering a project that would require an investment of $98,000 with no other cash outflows. The present value of the cash inflows
A company is considering a project that would require an investment of $98,000 with no other cash outflows. The present value of the cash inflows would be $125,000. The profitability index of the project is closest to: a. 1.28 b.0.78 C 0.28 d. 0.22 McDougal Products is considering the purchase of new equipment to place in its factory. The equipment would cost $365,000, have a ten-year useful life and a salvage value at the end of its useful life of $65,000. The company estimates that annual revenues and expenses associated with the would be as follows: 210,000 Revenues Less operating expenses: Salaries Depreciation Maintenance Net operating income 100,000 30,000 20.000 - 150.000 60,000 The simple rate of return on the new equipment is closest to: a. 16.4% b. 24.7% C. 30.0% d. 20.0%
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