What is the profitability index of the investment

Assignment Help Finance Basics
Reference no: EM131725648

You are offered an investment with returns of $ 2,130 in year 1, $ 4,927 in year 2, and $ 5,581 in year 3. The investment will cost you $ 7,836 today. If the appropriate Cost of Capital (quoted interest rate) is 7.3 %, what is the Profitability Index of the investment? Enter your answer to the nearest .01. Do not use the $ sign or commas in your answer. If the NPV is negative, use the - sign.

Reference no: EM131725648

Questions Cloud

What is the firm after-tax cost of debt : How many bonds will the firm have to issue to receive the needed funds? What is the firm's after-tax cost of debt if the firm's tax rate is 32 percent?
Why do we worry about these types of payments : Why do we worry about these types of payments if the result is more jobs for those in Mexico?
Explain the significance of the transaction to an analyst : For the past three years DMR, Inc. did not write off numerous accounts of customers who were in default and unlikely to pay their bills.
Principal and accrued interest on the bond : The bond matures tomorrow. How much will Rhett receive in total from this? investment, assuming all payments are made on these bonds as? expected?
What is the profitability index of the investment : The investment will cost you $ 8,638 today. If the appropriate Cost of Capital (quoted interest rate) is 9.3 %, what is the Profitability Index of investment.
What is? unida unlevered cost of? capital : a. What is? Unida's unlevered cost of? capital? b. What is? Unida's after-tax debt cost of? capital?
What is the expected return of a portfolio : If the? risk-free interest rate is 4.5% and the expected return of the market portfolio is 14.0%?, what is the expected return of a portfolio.
How might you rationalize your behavior : How might you rationalize your behavior if you worked for this company and rationalize the unethical behavior your company expects.
What would you say and what would you show to support : If asked for your current opinion about sustainability in business, what would you say and what would you show to support that opinion?

Reviews

Write a Review

Finance Basics Questions & Answers

  What are the portfolio weights for a portfolio

What are the portfolio weights for a portfolio that has 165 shares of Stock A that sell for $90 per share and 140 shares of Stock B that sell for $106 per share? (Round your answers to 4 decimal places (e.g., 32.1616).)

  What is the coupon rate on the bonds

A firm has bonds on the market with 9 years to maturity, YTM of 7.1% and a current price of $915. The bonds make semiannual payments. What is the coupon rate on the bonds?

  Analyze each transaction

Below are the external transactions for Shockers Incorporated.

  Words of the strategic plan for organization

Write a draft of no more than 1,800 words of the strategic plan for your organization, including the following:

  What will the cash flows for this project be

The firm has a tax rate of 35 percent, an opportunity cost of capital of 12 percent, and it expects net working capital to increase by $100,000 at the beginning of the project.

  What are the major differences between the two

Fully explain what is meant by scenario analysis and sensitivity analysis. what are the major differences between the two?

  What is the days sale outstanding

McDowell Industries sells on terms of 3/10, net 30. Total sales for the year are $912,500. Forty percent of the customers pay on the 10th day and take discounts; the other 60 percent pay, on average, 40 days after their purchases.a. What is the days ..

  Briefly describe four contributions of small business

Briefly describe four contributions of small business to the American economy.

  Ratios for the company financial statements

Calculate the financial ratios for the company's financial statements, and then interpret those results against company historical data as well as industry benchmarks:

  What is the new coupon rate

If the bank makes coupon payments semiannual for 1,000 face value, what is the new coupon rate?

  Percentage change in the bond price

A 9-year bond has a yield of 6% and a duration of 7.982 years. If the market yield changes by 35 basis points, what is the percentage change in the bond's price? The percentage change in the bond's price is %? decrease or increase?

  Explain importance of quality in a firms financial statement

Discuss the importance of quality in a firm's financial statements and how you would go about evaluating the quality of a firm's financial statement.

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