Problem 1. Creighton Company’s balance sheet and income statement are
1) Compute the margin, turnover, and return on investment for Creighton
2) What is the advantage of expanding the ROI formula to measure margin and
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%
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?