Kartman Corporation is evaluating four different real estate investments. Management plans to buy the properties today and sell them three years from löday. The aHU The following table summarizes the initial cost and the sale price in three years for each property: Sale Price in Year 3 Cost Today $1,020,000 Parkside Acres $520,000 1,470,000 870,000 Real Property Estates Lost Lake Properties 510,000 910,000 20,000 220,000 Overlook Kartman has a total capital budget of $540,000 to invest in properties. Which properties should it choose? The profitability index for Parkside Acres is - (Round to two decimal places.)

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
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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 12%.
The following table summarizes the initial cost and the sale price in three years for each property:
Cost Today
Sale Price in Year 3
$520,000
$1,020,000
Parkside Acres
870,000
1,470,000
Real Property Estates
Lost Lake Properties
910,000
510,000
220,000
Overlook
20,000
Kartman has a total capital budget of $540,000 to invest in properties. Which properties should it choose?
...
The profitability index for Parkside Acres is
(Round to two decimal places.)
Transcribed Image Text: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 12%. The following table summarizes the initial cost and the sale price in three years for each property: Cost Today Sale Price in Year 3 $520,000 $1,020,000 Parkside Acres 870,000 1,470,000 Real Property Estates Lost Lake Properties 910,000 510,000 220,000 Overlook 20,000 Kartman has a total capital budget of $540,000 to invest in properties. Which properties should it choose? ... The profitability index for Parkside Acres is (Round to two decimal places.)
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