Question:

Which investment would be preferable based on present value, profitability index, internal rate if return?

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Investment A

Initial cost $180.000

Estimated useful life 3 years

Estimated annual savings in cash operating cost $75.000

Minimum desired rate if return 10%

PV factor 2,4869

Investment B

Initial cost $270,00

Estimated useful life 3 years

Estimated annual savings in cash operating cost $120.000

Minimum desired rate if return 12%

PV factor 2.4018

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1 ANSWERS


  1. PV = A

    PI = A

    IRR = B

    now, if you want to be able to see if i'm telling the truth or not,

    DO YOUR OWN HOMEWORK!!!!!

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