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The treasurer of Amaro Canned Fruits Inc has projected the cash flows of projects A B and C as follows Year Project A Project B Project

The treasurer of Amaro Canned Fruits, Inc., has projected the cash flows of projects A, B, and C as follows:

   
Year Project A   Project B   Project C  
0 ?$ 195,000   ?$ 325,000   ?$ 195,000  
1   145,000     238,000     155,000  
2   145,000     238,000     125,000  

  
Suppose the relevant discount rate is 12 percent a year.
   
a.

Compute the profitability index for each of the three projects. (Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16))

   
  Profitability
index
  Project A   
  Project B   
  Project C   

   
b.

Compute the NPV for each of the three projects. (Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16))

  
  NPV
  Project A   
  Project B   
  Project C   

   
c.

Suppose these three projects are independent. Which project(s) should Amaro accept based on the profitability index rule?

   
 
Project A
Project B
Project C
Project A, Project B, Project C
Project A, Project B
Project A, Project C
Project B, Project C
  
d.

Suppose these three projects are mutually exclusive. Which project(s) should Amaro accept based on the profitability index rule?

   
 
Project A
Project B
Project C
Project A, Project B, Project C
Project A, Project B
Project A, Project C
Project B, Project C
  
e.

Suppose AmaroAc€?cs budget for these projects is $520,000. The projects are not divisible. Which project(s) should Amaro accept?

   
 
Project A
Project B
Project C
Project A, Project B, Project C
Project B, Project C
Project B, Project A
Project A, Project C
 

V

May 06 2020 View more View Less

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