FREE Trial
Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

XYZ has the following forecasted income information for a project it is considering. The firm cost of capital is 13%. The project will last for

XYZ has the following forecasted income information for a project it is considering. The firm cost of capital is 13%. The project will last for 3 years and cost $30,000.

Earnings before amortization and taxes23,000Amortization10,000Earnings before taxes13,000Taxes3,640Earnings after taxes9,360


Calculate the Profitability index.

Step by Step Solution

★★★★★

3.38 Rating (157 Votes )

There are 3 Steps involved in it

Step: 1

To calculate the Profitability Index PI you need to divide the pre... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Accounting

Intermediate Accounting

Authors: Kin Lo, George Fisher

3rd Edition Vol. 1

133865940, 133865943, 978-7300071374

More Books

Students also viewed these Accounting questions

Question

★★★★★
Chris hit the lottery!! She has the option of taking $520,000 today or $90,000 per year for the next 8 years, or $85,000 per year for the next nine years or $1,000,000 in ten years. If she can...

Answered: 1 week ago

Question

★★★★★
Nanson Company, a publicly owned corporation listed on a major stock exchange, forecasted operations for the fiscal year ending December 31 as shown in the following forecasted income statement:...

Answered: 1 week ago

Question

★★★★★
Read the case study "Southwest Airlines," found in Part 2 of your textbook. Review the "Guide to Case Analysis" found on pp. CA1 - CA11 of your textbook. (This guide follows the last case in the...

Answered: 1 week ago

Question

★★★★★
The owner of a building supply company has requested a cash budget for June. After examining the records of the company, you find the following: a. Cash balance on June 1 is $736. b. Actual sales for...

Answered: 1 week ago

Question

★★★★★
If these types of agreements are binding, why was Netscapes clickwrap agreement found to be invalid?

Answered: 1 week ago

Question

★★★★★
Lamb Company manufactures several lines of machine products. One unique part, a valve stem, requires specialized tools that need to be replaced. Management has decided that the only alternative to...

Answered: 1 week ago

Question

★★★★★
The lifetime of an electrical appliance (in thousands of hours) is a random variable X with density function f (x) = { 0, x Answered: 1 week ago

Answered: 1 week ago

Question

★★★★★
1. What types of tests can be performed using the data that may at least indirectly address the primary research question? 2. What do you think the primary conclusions of the white paper will be...

Answered: 1 week ago

Question

★★★★★
A perpetual preferred stock makes its first quarterly dividend payment of $2.00 in five quarters. If the required annual rate of return is 6% compounded quarterly, the stock's present value is...

Answered: 1 week ago

Question

★★★★★
Read NASW Code of Ethics Sections 1,2,5,& 6 and the Delaware Lawyer's Rules of Professional Conduct., 1.2, 1.6,.1.7,.1.10 & 1.13. In 2/3 pages, compare any two sections of the NASW Code with any two...

Answered: 1 week ago

Question

★★★★★
Please show your work. on the region (a) Find the critical points ofwc inside M and classify them as local min, local max or saddle pt. (b) Now nd the maximum and minimum values of f on the portion...

Answered: 1 week ago

Question

★★★★★
Hugh Payne operates a fishing resort in Nome Alaska. Depreciation on the resort buildings is $6,000 per year. Real estate taxes are $8,000 per year. General property insurance is $9,000 per year....

Answered: 1 week ago

Question

★★★★★
An indoor air conditioning unit has a lifetime that is exponentially distributed with the mean of 730 days. When such air conditioning unit stops functioning, it is replaced immediately. a. What is...

Answered: 1 week ago

Question

★★★★★
Weighted average accumulated expenditures are $1,200,000 on a project for which work steadily progressed during the current year. The following debt was outstanding during the current year....

Answered: 1 week ago

Question

★★★★★
PART I You own a T-shirt company that has done so well that the class has decided to expand its operations. You plan to open a store near campus, in competition with several other stores. You must...

Answered: 1 week ago

Question

★★★★★
PIZZA DELIVERY WITH UNMANNED DRONES In the summer of 2013, a Domino's franchise in the United Kingdom posted a video showing an unmanned drone delivering pizzas in the company's Heatwave bags. Was...

Answered: 1 week ago

Question

★★★★★
Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have rate of 7.7 percent paid annually. If the YTM is 9.7 percent, what is the...

Answered: 1 week ago

Question

★★★★★
I frequently use NY Times and CNN and am aware of Fox News but I never use it. I visit these sites, NY Times and CNN, a few times a week whenever I have to research something or see something on...

Answered: 1 week ago

Question

★★★★★
Based on the information set out in PA-44 below, prepare the cash flows from operating activities section of the statement of cash flows using the direct method. Data from PA-44 Zippo Ltd.Income...

Answered: 1 week ago

Question

★★★★★
Highland Packers (HP) is a breeder of llamas. Llamas are camel-like animals that are naturally found in the Andes Mountains in South America. They have been domesticated for some time for use as pack...

Answered: 1 week ago

Question

★★★★★
Refer to the information presented in PA-11. Assume that Jill K. Ltd. is a private corporation that elects to report its financial results in accordance with ASPE. Data from PA-11 Income tax expense...

Answered: 1 week ago

Question

★★★★★
Price increases from $10 to $20. Demand is ______ and total revenue ______.

Answered: 1 week ago

Question

★★★★★
Three points are identified on the graph in Figure 4P-1. a. At point A, demand is ____. b. At point B, demand is ____. c. At point C, demand is ____.

Answered: 1 week ago

Question

★★★★★
You have noticed that the price of tickets to your universitys basketball games keeps increasing but the supply of tickets remains the same. Why might supply be unresponsive to changes in price?

Answered: 1 week ago

Previous Question Next Question