What is the project profitability index

Assignment Help Financial Management
Reference no: EM131317123

Kevin is considering building a new studio to record his podcast. The studio costs $300,000 to build, but the higher quality will attract more downloads and subscriptions. If the new studio generates $80,000 per year in incremental cash flows for the next 5 years, what is the project's profitability index? Assume that the discount rate is 5 percent.

Reference no: EM131317123

Questions Cloud

Residual value of firm after period of competitive adventage : Sales growth rates: Base year = 15% with a fade rate of 1% a year for years 1-10: (increasing sales due to sustained competitive advantage and a differentiated product)[source: Strategic Plan]. Fade rate is the rate of decline per year (each year) fr..
Discuss about the muhammed birth history : On the KKK, covering how they started and where, their methods of intimidating and killing African Americans, using newspaper headlines,Amazon book covers, google images, etc.
Considering building new studio to record his podcast : Kevin is considering building a new studio to record his podcast. The studio costs $300,000 to build, but the higher quality will attract more downloads and subscriptions. If the new studio generates $80,000 per year in incremental cash flows for the..
Identify the effects of this pollution on human health : Create a 5-to 8-slide PowerPoint presentation or a 350-to 525-word proposal. Identify the effects of this pollution on human health and the environment. Explain the causes of this pollution
What is the project profitability index : Kevin is considering building a new studio to record his podcast. The studio costs $300,000 to build, but the higher quality will attract more downloads and subscriptions. If the new studio generates $80,000 per year in incremental cash flows for the..
Lead to economic growth and increase tax revenue : The city of Detroit is deciding whether or not to build an aquarium. Officials believe that a world-class stingray exhibit will attract families from across Michigan to visit the city. In turn, this will spur local businesses, lead to economic growth..
How much free cash flow did the firm generate : Hartzell Inc. had the following data for 2010, in millions: Net income = $600; after-tax operating income [EBIT (1-T)] = $700; and Total assets = $2,000. Information for 2011 is as follows: Net income = $825; after-tax operating income [EBIT (1-T)] =..
How much free cash flow did the firm generate : Hartzell Inc. had the following data for 2010, in millions: Net income = $600; after-tax operating income [EBIT (1-T)] = $700; and Total assets = $2,000. Information for 2011 is as follows: Net income = $825; after-tax operating income [EBIT (1-T)] =..
Lead to economic growth and increase tax revenue : The city of Detroit is deciding whether or not to build an aquarium. Officials believe that a world-class stingray exhibit will attract families from across Michigan to visit the city. In turn, this will spur local businesses, lead to economic growth..

Reviews

Write a Review

Financial Management Questions & Answers

  Manufacturers of fine zithers

You have been hired as a consultant for Pristine Urban-Tech Zither, Inc. (PUTZ), manufacturers of fine zithers. The market for zithers is growing quickly. Assume the company has other profitable projects. MACRS schedule. What is the NPV of the projec..

  Basis in the equipment received in the exchange

Fred and Sarajane exchanged equipment in a qualifying-like-kind exchange, Fred gives up equipment with an adjusted basis of $14,000 (fair market value of $15,000)in exchange for Sarajane's equipment with a fair market value of $12,000 plus $3,000 cas..

  At what discount rate is the npv just equal to zero

An investment has an installed cost of $54972. The cash flows over the four-year life of the investment are projected to be $18202, $20327, $18949, and $13403. At what discount rate is the NPV just equal to zero?

  Correct valuation equation for this bond

Dizzy Corporation’s 10-year semi annual bond bearing a coupon rate of 12% is currently selling for $950. Given this information, which of the following is the correct valuation equation for this bond? Note: PVIFA(r,t) = [{1-1/(1+r)t}/r] and PVIF(r,t)..

  What is van dykes after tax yield on the preferred stock

What is Van Dyke's after-tax yield on the preferred stock?- What is the after-tax return on the preferred stock, assuming a 70% dividend exclusion?

  What is pharmecologys current stock price

Pharmecology is about to pay a dividend of $1.65 per share. It’s a mature company, but future EPS and dividends are expected to grow with inflation, which is forecasted at 4.25% per year. The nominal cost of capital is 11.00%. What is Pharmecology’s ..

  Retirement account-expect to have in account when he retires

Fei has 11,600 dollars in his retirement account. In addition, he plans to save 8,100 dollars per year in his account for 8 years. His first contribution to his account is expected immediately and his last contribution is expected in 7 years. Fei exp..

  Define the terms finance and financial management

Define the terms finance and financial management. What are the major sub-areas of finance? Identify and define the three basic forms of business ownership. Describe the advantages and disadvantages of each

  What is the accrued interest on the bond

Consider a bond with a settlement date of 12/12/1990. The bond has a face value of $100. The maturity of the bond is March 15, 2014. The coupon rate is 5.5%. If the yield to maturity of the bond is 5.34% (bond equivalent yield, semi annual compoundin..

  The market rate of return on similar securities

What is the maximum price an investor should pay for the common stock of a firm that has no growth opportunities but pays an annual dividend of $1.85? The market rate of return on similar securities is 14.5 percent.

  What is the divisor

Able, Baker, and Charlie are the only three stocks in an index. The stocks sell for $93, $312, and $78, respectively. Assume that Able undergoes a 1-for-2 reverse stock split. What is the divisor?

  What is a fair value for this stock today

A company is expected to have earnings of $1.52 per share in one year, $1.98 per share in two years, $2.34 per share in three years, and $2.71 in four years. The dividend payout ratio is also expected to remain at 40% over the next four years. The la..

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