Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You are thinking about setting up a fish farm in your pond. You can rig it up to farm Tilapia or Pollock, but not both.

You are thinking about setting up a fish farm in your pond. You can rig it up to farm Tilapia or Pollock, but not both. You have the following information on the two possibilities:

Type of Fish Farm Initial Cost Annual Cash Flow
Tilapia $1,000 $200
Pollock $1,800 $350

Each option will yield the annual cash flows for 10 years and then will be finished with no additional cost or revenue. If the required return is 8%, what is the PI of the incremental project that you would use to decide between these two types of fish farms?

A.) 0.6468 B) 0.3047 C.) 0.3420 D.) 0.2581

Step by Step Solution

There are 3 Steps involved in it

Step: 1

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_2

Step: 3

blur-text-image_3

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

Mastering Islamic Finance

Authors: Faizal Karbani

1st Edition

1292001445, 978-1292001449

More Books

Students also viewed these Finance questions