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

Question

  

What is the profitability index for the set of cash flows if the relevant discount rate is 10 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 15 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 22 percent? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)

  

Year Cash Flow 0 –$ 18,300 1 10,600 2 9,500 3 6,000

Explanation / Answer

21995.49/18300

= 1.20

20345.89 /18300

=1.11

18375.46/18300

= 1.004

YEAR cash flow D= 10% D= 15% D= 22% (A) present value@10% (B) present value of cashflow(A*B) present value@15%(C) present value of cashflow(A*C) present value@22% present value of cashflow 1 10,600 .90909 9636.35 .86957 9217.44 .81967 8688.50 2 9,500 .82645 7851.28 .75614 7183.33 .67186 6382.67 3 6,000 .75131 4507.86 .65752 3945.12 .55071 3304.26 Present value of cash flow 21995.49 20345.89 18375.46 Profitability index =Present value /Initial investment

21995.49/18300

= 1.20

20345.89 /18300

=1.11

18375.46/18300

= 1.004

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

---

---

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