Calculate the profitability index for the cash flows provided in the table below
Note: The negative cash flow for year 0 is the initial investment for the project. Assume a required rate of return of 9.00%
Year Cash Flow
0 -$90,000
1 $32,000
2 $32,000
3 $32,000
A) 0.85
B) 0.90
C) 1.00
D) 1.11
B
Explanation: B) Via Calculator: N = 3, I = 9, PMT = 32,000, FV = 0, PV = $81,001.43, PI = PV/Initial investment = $81,001.43/$90,000 = 0.90.
Business
You might also like to view...
Firms interested in using socially responsible packaging that is less harmful to the environment are developing ________
A) aesthetic packaging B) green packaging C) ingredient packaging D) venture packaging E) Kansei engineering
Business
What is the reliability of the three components connected in series shown below?
A) 0.799425 B) 0.85000 C) 0.91333 D) 0.95000 E) 2.79
Business