Assume the following information for a capital budgeting proposal with a five-year time horizon: Initial...
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Accounting
Assume the following information for a capital budgeting proposal with a five-year time horizon: Initial investment: Cost of equipment (zero salvage value) $ 430,000 Annual revenues and costs: Sales revenues $ 300,000 Variable expenses $ 130,000 Depreciation expense $ 50,000 Fixed out-of-pocket costs $ 40,000 Click here to view Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using the tables provided. Assuming a discount rate of 12%, this proposals profitability index is closest to: Multiple Choice 1.14. 1.18. 1.09. 1.04.
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