What is the profitability index for the set of cash flows if the relevant discou
ID: 2754411 • Letter: W
Question
What is the profitability index for the set of cash flows if the relevant discount rate is 11 percent? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)
What is the profitability index for the set of cash flows if the relevant discount rate is 16 percent? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)
What is the profitability index for the set of cash flows if the relevant discount rate is 23 percent? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)
Year Cash Flow 0 –$ 19,000 1 11,300 2 10,200 3 6,700
Explanation / Answer
Statement showing Cash flows Particulars Time PVf@11% Amount PV Cash Outflows - 1.00 (19,000.00) (19,000.00) PV of Cash outflows (19,000.00) Cash inflows 1.00 0.9009 11,300.00 10,180.18 Cash inflows 2.00 0.8116 10,200.00 8,278.55 Cash inflows 3.00 0.7312 6,700.00 4,898.98 PV of Cash Inflows 23,357.71 PI= PVCI/PVCO 1.23 Statement showing Cash flows Particulars Time PVf@16% Amount PV Cash Outflows - 1.00 (19,000.00) (19,000.00) PV of Cash outflows (19,000.00) Cash inflows 1.00 0.8621 11,300.00 9,741.38 Cash inflows 2.00 0.7432 10,200.00 7,580.26 Cash inflows 3.00 0.6407 6,700.00 4,292.41 PV of Cash Inflows 21,614.05 PI= PVCI/PVCO 1.14 Statement showing Cash flows Particulars Time PVf@23% Amount PV Cash Outflows - 1.00 (19,000.00) (19,000.00) PV of Cash outflows (19,000.00) Cash inflows 1.00 0.8130 11,300.00 9,186.99 Cash inflows 2.00 0.6610 10,200.00 6,742.02 Cash inflows 3.00 0.5374 6,700.00 3,600.47 PV of Cash Inflows 19,529.48 PI= PVCI/PVCO 1.03
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