Kartman Corporation is evaluating four different real estate investments. Management plans to buy the properties today and sell them three years from today. The annual discount rate for these investments is 16%. The following table summarizes the initial cost and the sale price in three years for each property: Sale Price in Three Years Parkside Acres $860,000 Real Property Estates 1,380,000 Lost Lake Properties 980,000 Overlook 360,000 Kartman has a total capital budget of $800,000 to invest in properties. Which properties should it choose? Cost Today $460,000 800,000 620,000 140,000 The profitability index for Parkside Acres is (Round to two decimal places.)
Kartman Corporation is evaluating four different real estate investments. Management plans to buy the properties today and sell them three years from today. The annual discount rate for these investments is 16%. The following table summarizes the initial cost and the sale price in three years for each property: Sale Price in Three Years Parkside Acres $860,000 Real Property Estates 1,380,000 Lost Lake Properties 980,000 Overlook 360,000 Kartman has a total capital budget of $800,000 to invest in properties. Which properties should it choose? Cost Today $460,000 800,000 620,000 140,000 The profitability index for Parkside Acres is (Round to two decimal places.)
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 12P
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