Gold mining-profitability index when evaluating project

Assignment Help Financial Management
Reference no: EM131452844

Gold Mining, Inc. is using the profitability index (PI) when evaluating projects. Gold Mining’s cost of capital is 13.02 percent. What is the PI of a project if the initial costs are $1,456,570 and the project life is estimated as 10 years? The project will produce the same after-tax cash inflows of $685,847 per year at the end of the year.

Reference no: EM131452844

Questions Cloud

Don also goes to lease an apartment and buy groceries : Don also goes to lease an apartment and buy groceries. He signs a lease. He decides that he doesn’t like the apartment after living there for two months. Can he
End-of-the-year after-tax cash inflows : he project will produce the following end-of-the-year after-tax cash inflows of
What is the load handling time : An automated guided vehicle system is being planned for a warehouse complex. The AGVS will be a driverless train system, and each train will consist.
What is the purpose of each landscape : What is the purpose of each landscape? How are the images similar, and how are they different?
Gold mining-profitability index when evaluating project : Gold Mining, Inc. is using the profitability index (PI) when evaluating projects.
Why asexually reproducing organisms : Explain why asexually reproducing organisms are generally found in environments that do not change very much through time, while sexually reproducing organisms.
Calculate the annualized stock price return of wfm : Calculate the annualized stock price return of WFM over the last 3, 5, and 10 years. Identify two competitors of WFM and contrast the ratios.
Determine the number of trucks required : The From-To Chart in the table below indicates the number of loads moved per 8-hr day (above the slash) and the distances in feet.
Complimentary base pairing in dna replication : Describe the role of double helix in complimentary base pairing in DNA replication. What does it mean when we say that the two strands of DNA in the double.


Write a Review


Financial Management Questions & Answers

  For the cash flows in the previous problem

For the cash flows in the previous problem, suppose the firm uses the NPV decision rule. At a required return of 9% should the firm accept this project? What if the required return was 21%.

  What is the projects coefficient of variation

Stock A has a beta of 0.7, whereas Stock B has a beta of 1.3. Portfolio P has 50% invested in both A and B. Which of the following would occur if the market risk premium increased by 1% but the risk-free rate remained constant? Cheng Inc. is consider..

  Do depository institutions really create money

Comment on John D. Rocke feller's statement, "I believe that the power to make money is a gift from God."- Do depository institutions really create money?

  The current exchange rate

The current exchange rate is 0.93 euros per dollar, but you believe the dollar will decline to 0.85 Euros per dollar. If a euro-denominated bond is yielding 2%, what return do you expect in U.S. dollars?

  Annual dividend on its common stock-market rate of return

Northern Gas recently paid a $2.80 annual dividend on its common stock. This dividend increases at an average rate of 3.8 percent per year. The stock is currently selling for $26.91 a share. What is the market rate of return?

  About an investment deal

Your friend has given you a hot tip about an investment deal that will pay off $6,000 a year at the end of each of the next three years. If your required rate of return for investments with this degree of risk is 7%, approximately how much is the inv..

  What is the price of the product under this expense model

A company is considering a project to manufacture a product with the following pro forma cost and sales information: Accounting Breakeven QUANTITY = 10,500 units; Cash Breakeven QUANTITY = 8,200 units; What is the PRICE of the product under this expe..

  What is your cash flow in time for this investment

You are working on a bid to build two apartment buildings a year for the next 5 years for a local college. This project requires the purchase of $750,000 of equipment that will be depreciated using 5 year MACRS. You will also need $146,000 in net wor..

  How many orders will be made per year

The Miller Brewing. has developed a new type of Beer. The local distributor expects to increase his sales by 20% over the past year due to this new development. Last year's sales were $50,000 at a selling price of $100 per unit. What is the total cos..

  What is the current price of the bond

Assume that a bond makes 10 equal annual payments of $1,000 starting one year from today. The bond will make an additional payment of $100,000 at the end of the last year, year 10. If the discount rate is 3.5$% per annum, what is the current price of..

  What return do you need to buy this stock

You are considering adding stock in BAMEB Motorcycles to your portfolio. You found their Beta at 0.47, the risk free rate as proxied by 10-year US Treasuries at 0.55%, and return on the market as proxied by the S&P 500 at 12.38%. What return do you n..

  Ratio of the macaulay duration to the macaulay convexity

Your company has a liability, which calls for a single payment of 1000 due in ten years, and it funds it with a one-year zero-coupon bond with a price of 200, and a twenty-year zero coupon bond with a price of 800. Current continuously compounded int..

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