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How do you compute the profitability index of a capital-budgeting proposal?
Wiki User
∙ 10y ago
Dividing the present value of the annual after-tax cash flows by the cost of the project
Wiki User
∙ 10y ago
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What is the advantages and disadvantages of profitability index?
Profitability Index AdvantagesTells whether an investment increases the firm's valueConsiders all cash flows of the projectConsiders the time value of moneyConsiders the risk of future cash flows (through the cost of capital) Useful in ranking and selecting projects when capital is rationedDisadvantagesRequires an estimate of the cost of capital in order to calculate the profitability indexMay not give the correct decision when used to compare mutually exclusive projects
If a project with conventional cash flows has a profitability index equal to 1.0 the project you will pay back during the life of the project II will have an internal rate of return that equals the?
required return
Difference between Index File and Index Sequential file?
index file is organized with the help of any key as index number at rondomly but index sequencial file organized with the help of any index sequentialy rajesh patel
What is the purpose of an index journal?
The primary purpose of an index journal is to hold all the information regarding a specific item. Such as an index journal for a vehicular manual or an index journal for a book.
What serves as an index of office or records?
It is a database, either a manual card index or an electronic computer system.
What is a profitability index?
Profitability index is the "rolling forward" of indices of profitability. For example, a company has a turnover of
How does one create a profitability index?
Profitability indexes are not hard to come by. To create one you must go online to a profitability website in which they have step by step instructions according to the index you need.
For the NPV criteria a project is acceptable if the NPV is while for the profitability index a project is acceptable if the profitability index is?
less than zero, greater than the requred return
How do you compute the obesity?
Body Mass Index- look it up
When hard capital rationing exist project may be accurately evaluated by use of what?
Profitability Index
What has the author Ray I Reul written?
Ray I. Reul has written: 'Profitability index for investments' -- subject(s): Capital investments
What is the advantages and disadvantages of profitability index?
Profitability Index AdvantagesTells whether an investment increases the firm's valueConsiders all cash flows of the projectConsiders the time value of moneyConsiders the risk of future cash flows (through the cost of capital) Useful in ranking and selecting projects when capital is rationedDisadvantagesRequires an estimate of the cost of capital in order to calculate the profitability indexMay not give the correct decision when used to compare mutually exclusive projects
How do you solve for price index?
To compute the price index, the cost of the market basket in any period is divided by the cost of the market basket in the base period, and the result is multiplied by 100. Price Index= P3/ Pb x 100
Payback period versus discounted payback period versus net present value versus profitability index?
discounted payback period
The General Accounting Office was set up in 1921 to what?
to compute and report CPI (Consumer Price Index)
Compute the Spearman-Brown reliability index if the correlation between the odd and even scores is 0.84?
The Spearman Brown Reliability Index, r', is given byr' = 2r / (1 + r)r' = 0.91304
What are stock indexes used for?
A stock index measures the value of a section of a stock market. Investors and financial managers compute this index from the prices of selected stocks. It describes the market and compares the return on certain investments.
