saint leo university MBA 560 Module 8 - Test 8: Problems

Question

saint leo university MBA 560 Module 8 - Test 8: Problems

Question # 00002520 Posted By: neil2103 Updated on: 10/19/2013 10:42 PM Due on: 10/22/2013

Subject Accounting Topic Accounting Tutorials:

Question

saint leo university MBA 560 Module 8 - Test 8: Problems

Problem 1. Creighton Company's balance sheet and income statement are provided below:

Required:

1) Compute the margin, turnover, and return on investment for Creighton Company.
2) What is the advantage of expanding the ROI formula to measure margin and turnover separately?

Problem 2. Delta Company is evaluating two different capital investments, Project X and Y. Either X or Y would cost $100,000, and the company cannot afford to do both. The company expects that Project X would provide net cash inflows of $30,000 per year for 5 years. For Project Y, the net cash inflows are expected to be as follows:

Delta's cost of capital is 12%

Required:

1) Calculate the present value index for Project X and for Project Y.
2) Indicate whether each of the projects is an acceptable investment.
3) Which of the two projects should Delta implement?