What is the profitability index decision rule

Assignment Help Financial Management
Reference no: EM131074576

Describe how the profitability index is calculated and describe the information this measure provides about a sequence of cash flows. What is the profitability index decision rule?

Reference no: EM131074576

Questions Cloud

What are the ethical considerations involved in decision : You are the CEO of a small pharmaceutical company. Your company is privately held, with 75 shareholders; however, you own a majority of the shares and thus, you maintain control over the Board of Directors. Describe how those theories apply to this s..
The discrepancy between the feasibility of project : The discrepancy between the feasibility of a project in a host country from the perspective of the U.S. parent versus the subsidiary administering the project is likely to be greater for projects in countries where:
Nobel-prize winning black-scholes options pricing model : The nobel-prize winning black-scholes options pricing model has been the worst widely used trading tool for options in the past decades.is it really such a perfect mathematical model to compute option value? if not, how do market participants make ad..
Unit in variable costs and fixed costs : A company has $6.70 per unit in variable costs and $4.00 per unit in fixed costs at a volume of 50,000 units. If the company marks up total cost by 0.44, what price should be charged if 69,000 units are expected to be sold?
What is the profitability index decision rule : Describe how the profitability index is calculated and describe the information this measure provides about a sequence of cash flows. What is the profitability index decision rule?
The overall standard deviation of returns of the portfolio : The standard deviation of Home Depot Share prices is 30% and that of General Motors shares is 30%. When I hold both stocks in my portfolio and the stocks returns have zero correlation, the overall standard deviation of returns of the portfolio is:
Superior method of evaluating the cash flows from project : Why is NPV considered a superior method of evaluating the cash flows from a project? Suppose the NPV for a project's cash flows is computed to be $2,500. What does this number represent with respect to the firm's shareholders?
Construction of plant to manufacture energy saving device : ELC Electrical Services is considering the construction of a plant to manufacture a new energy saving device for small offices. The company recently commissioned a $100,000, two-year study to assess the market demand for the proposed product. Using t..
About sequence of cash flows : Describe how the IRR is calculated, and describe the information this measure provides about a sequence of cash flows. What is the IRR criterion decision rule? What is the relationship between IRR and NPV? Are there any situations in which you might ..

Reviews

Write a Review

Financial Management Questions & Answers

  What damages does defendant owe the plaintiff

Sasha is bartending at The Right Round, a nearby pub, because her new song isn’t selling very well. She sees Joe-Lo, a regular customer at The Right Round, is clearly intoxicated. He asks her for one more round of drinks before he leaves. Did defenda..

  What is the default risk premium on the corporate bond

A Treasury bond that matures in 10 years has a yield of 6%. A 10-year corporate bond has a yield of 8%. Assume that the liquidity premium on the corporate bond is 0.5%. What is the default risk premium on the corporate bond?

  The yield to maturity on the company outstanding bonds

Percy Motors has a target capital structure of 40% debit and 60% common equity, with no preferred stock. The yield to maturity on the company's outstanding bonds is 9, and its tax rate is 40%. Percy's CFO estimates that the company's WACC is 9.96% Wh..

  Calculate usher sports shops cash flow from operations

In 2015, Usher Sports Shop had cash flows from investing activities of –$4,534,000 and cash flows from financing activities of –$5,965,000. The balance in the firm’s cash account was $1,632,000 at the beginning of 2015 and $1,776,000 at the end of th..

  What is the current value of the companys stock

JJ Industries will pay a regular dividend of $1.30 per share for each of the next four years. At the end of the four years, the company will also pay out a $44 per share liquidating dividend, and the company will cease operations. If the discount rat..

  Analysis of future value-types of boreholes for drilling

In some manufacturing operation three types of boreholes for drilling may be used. The cheapest is a stainless high speed steel (HSS), but has a shorter one of gold or another oxide of titanium nitride life. what kind of hole should be used, accordin..

  What recent evidence about the performance of medical homes

What recent evidence about the performance of medical homes can you find? What recent evidence about bundled payment programs can you find? What recent evidence about Medicare Advantage HMOs can you find? What recent evidence about the performance of..

  What is cost of capital at marquez optimal capital structure

An investment banking firm has estimated the following after-tax cost of debt and cost of equity for Marquez Luxury Travel Tours. What is the cost of capital at Marquez’ optimal capital structure given the above information?

  Calculate the current price of techwig index

The PLN 980 strike price six months TECHWIG index (the technology index for the Warsaw Stock Exchange) European put option premium is 5.45 Polish Zloties (PLN) and the 980 strike price six months TECHWIG index European call option premium is PLN 35.5..

  Total investors capital x after-tax cost of capital

For the company you selected, describe your company’s operations and the market in which it operates. Search for the EVA, and free cash flow using the firm’s annual report. Define their respective meanings and how your firm is performing in these are..

  A bond is issued with coupon

A bond is issued with a coupon of 4% paid annually, a maturity of 30 years, and a yield to maturity of 7%. What rate of return will be earned will be earned by an investor who purchases the bond for $627.73 and holds it for 1 year if the bond's yield..

  What strategy should the beef producer follow

The standard deviation of monthly changes in the spot price of live cattle is (in cents per pound) 1.5. The standard deviation of monthly changes in the futures price of live cattle for the closest contract is 1.2. What strategy should the beef produ..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd