Net Present value and Profitability index
Not what you're looking for?
Profitability Index versus NPV. Consider these two projects:
Project C 0 C 1 C 2 C 3
A -$36 +$20 +$20 +$20
B - 50 + 25 + 25 + 25
A. Which project has the higher NPV if the discount rate is 10 percent?
B. Which has the higher profitability index?
C. Which project is most attractive to a firm that can raise an unlimited amount of funds to pay for its investment projects? Which project is most attractive to a firm that is limited in the funds it can raise?
Please help me with answers and WORK to these questions so that I can learn how to perform these problems. Thanks!!
Purchase this Solution
Solution Summary
This explains the steps to compute net present value and profitability index with the help of an example
Solution Preview
A. Which project has the higher NPV if the discount rate is 10 percent?
Project A is having higher NPV
B. Which has the higher profitability index?
Project A is having higher PI
C. Which project is most attractive to a firm ...
Purchase this Solution
Free BrainMass Quizzes
Learning Lean
This quiz will help you understand the basic concepts of Lean.
Production and cost theory
Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.
Introduction to Finance
This quiz test introductory finance topics.
Business Ethics Awareness Strategy
This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.
Managing the Older Worker
This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce