## Description

** Problem 1.** Creighton Company’s balance sheet and income statement are

provided below:

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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:

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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?

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