Consider the following cash flows: Year Cash Flow 0 $-28,300 1 15,400 2 13,500 3

Question

Consider the following cash flows: Year Cash Flow 0 $-28,300 1 15,400 2 13,500 3 9,900 Requirement 1: What is the profitability index for the above set of cash flows if the relevant discount rate is 9 percent? (Do not round intermediate calculations. Round your answer to 3 decimal places (e.g., 32.161).) Requirement 2: What is the profitability index if the discount rate is 14 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 25 percent? (Do not round intermediate calculations. Round your answer to 3 decimal places (e.g., 32.161).)

Explanation / Answer

year cash flow DF   @ 9% PV 0 -28300 1 -28300 1 15400 0.91743119 14128.4404 2 13500 0.84167999 11362.6799 3 9900 0.77218348 7644.61645 NPV 4835.73673 PI 1.171 year cash flow DF   @ 14% PV 0 -28300 1 -28300 1 15400 0.87719298 13508.7719 2 13500 0.76946753 10387.8116 3 9900 0.67497152 6682.21801 NPV 2278.80157 PI 1.081 year cash flow DF   @ 25% PV 0 -28300 1.0000000 -28300 1 15400 0.8000000 12320 2 13500 0.6400000 8640 3 9900 0.5120000 5068.8 NPV -2271.2 PI 0.920

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.