What is the profitability index for the above set of cash flows if the relevant

Question

What is the profitability index for the above set of cash flows if the relevant discount rate is 12 percent?(Do not round intermediate calculations. Round your answer to 3 decimal places (e.g., 32.161).)

What is the profitability index if the discount rate is 17 percent? (Do not round intermediate calculations. Round your answer to 3 decimal places (e.g., 32.161).)

What is the profitability index if the discount rate is 24 percent? (Do not round intermediate calculations. Round your answer to 3 decimal places (e.g., 32.161).)

Explanation / Answer

Requirement 1:

Profitability index= [(14,500 /1.12)+(14,400 /1.12^2)+(10,800/1.12^3)]/29200= 1.100

Requirement 2:

Profitability index= [(14,500 /1.17)+(14,400 /1.17^2)+(10,800/1.17^3)]/29200= 1.016

Requirement 3:

Profitability index= [(14,500 /1.24)+(14,400 /1.24^2)+(10,800/1.24^3)]/29200= 0.915

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