Uses profitability index when evaluating projects

Assignment Help Financial Management
Reference no: EM131353188

Gold mining, inc uses the profitability index when evaluating projects. gold mining's cost of capital is 11.77 percent. what is the PI of a project if the initial costs are $2320888 and the project life is estimated as 10 years? the project will produce the same after-tax cash inflows of $383311 per year at the end of the year

Reference no: EM131353188

Questions Cloud

The debt business or non-business bad debt : Several years ago, R’s son, S, got into the restaurant business. R loaned S $10,000 to help him get the business going. No note was signed nor was any interest charged. The business was initially a huge success but as time passed, it began having fin..
Discuss the issues and concerns of gender and globalization : Choose a topic of interest that we have discussed in class or that directly relates to class conversations and readings. For this paper, your research skills will come in to play, because you are asked to incorporate three new sources outside of c..
Show by the method of lagrangian multipliers : If the final temperature of the metal is Tf and that of the liquid is Tj, then show by the method of Lagrangian multipliers that the condition for the entropy change of the universe to be a maximum is that Tf = Tj.
Differentiate between ectoderm-mesoderm : Differentiate between ectoderm, mesoderm and endoderm and list what tissues arise from each?
Uses profitability index when evaluating projects : Gold mining, inc uses the profitability index when evaluating projects. gold mining's cost of capital is 11.77 percent. what is the PI of a project if the initial costs are $2320888 and the project life is estimated as 10 years? the project will prod..
Analyze the mission statement of the selected organization : Analyze the mission statement of the selected organization. Determine two characteristics or components of the mission statement that you believe are most aligned with the organization's directional strategy. Justify your response.
What is the project completion time : The activities described by the following table are given for the Howard Corporation in Kansas: Find the critical path. What is the project completion time
Bond account-planning to save for retirement : You are planning to save for retirement over the next 25 years. To do this, you will invest $500 a month in a stock account and $200 a month in a bond account. The return of the stock account is expected to be 8 percent, and the bond account will pay..
Briefly discuss the historical aspect of the issue : Briefly discuss the historical aspect of the issue.Was there a particular event or series of events in society that focused attention on the issue?What interest group is actively involved?How do the major theories discussed in this class explain the ..

Reviews

Write a Review

Financial Management Questions & Answers

  Contrast the four basic types of competition

Define, compare, and contrast the four basic types of competition. Then, pick an industry (other than those used in exhibit 3.6) and describe the different types using firms and products in that industry.

  What is the current price of a bond

What is the current price of a bond if it is priced to yield 2 percent, has a $1,000 face value, has 10 years to maturity, pays semiannual coupon payments, and has a coupon rate of 7 percent?

  Difference between individual and organizational ethics

What is the difference between individual and organizational ethics? Why is it important that we understand that difference in a business environment?

  The interest is discounted monthly

Company XYZ purchased some machinery and gave a five-year note with a maturity value of $20,000. The discount rate is 8% annually and the interest is discounted monthly. How much did the company borrow?

  The fixed asset falls into the three-year MACRS class

Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.58 million. The fixed asset falls into the three-year MACRS class. The project is estimated to generate $2,040,000 in annual sale..

  Identify the top companies in the industry

Identify an industry to focus on. Explain why you chose this industry - Identify the top companies in the industry

  Using internal rate of return approach to ranking projects

A firm must choose from six capital budgeting proposals outlined below. The firm is subject to capital rationing and has a capital budget of $1,000,000; the firm's cost of capital is 15 percent. Using the internal rate of return approach to ranking p..

  What is the inventory carry cost for andrews

From a marginal analysis perspective, what is the inventory carry cost for Andrews if the company carries one additional unit of Adam in inventory at the end?

  Present value of tax shield if corporate tax rate increases

A triple A rated company borrows $100 millions interest only loan for a 10 year period at fixed rate of 5.5 percent. Assuming the company is in the 35 percent tax bracket. What will be the present value of the tax shield over the ten year period assu..

  The annual interest rate and the loan will mature

You need $100,000 to open the brewery. Assume the bank has offered to give you a loan. The annual interest rate is 6% and the loan will mature (come due) in one year. If you expect the project to generate a return of 4% in the first year, should you ..

  About the current at risk and passive activity loss rules

The end of the year is approaching and your new tax client, Maxine, has begun to focus on ways of minimizing her 2015 income tax liability. Several years ago she purchased an investment in Teal Limited Partnership, which is subject to the "at risk" a..

  What is the effective annual rate on this loan

Calculating Loan Payments- You want to buy a new sports coupe for $79,500 and the finance office at the dealership has quoted you an APR of 5.8 percent for a 60-month loan to buy the car. What will your monthly payments be? What is the effective annu..

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