What is the profitability index for the above set of cash flows if the relevant
ID: 2773832 • Letter: W
Question
What is the profitability index for the above set of cash flows if the relevant discount rate is 8 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 13 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 20 percent? (Do not round intermediate calculations.Round your answer to 3 decimal places (e.g., 32.161).)
consider the following cash flows:Explanation / Answer
Statement showing PI Particulars Time PVf@8% Amount PV Cash Outflows - 1.00 (29,900.00) (29,900.00) PV of Cash outflows (29,900.00) Cash inflows 1.00 0.9259 13,800.00 12,777.78 Cash inflows 2.00 0.8573 15,100.00 12,945.82 Cash inflows 3.00 0.7938 11,500.00 9,129.07 PV of Cash Inflows 34,852.66 NPV 4,952.66 PI = PV of cash flows/Initial Invt PI = 34,852.66/29900 PI = 1.17 Statement showing PI Particulars Time PVf@13% Amount PV Cash Outflows - 1.00 (29,900.00) (29,900.00) PV of Cash outflows (29,900.00) Cash inflows 1.00 0.8850 13,800.00 12,212.39 Cash inflows 2.00 0.7831 15,100.00 11,825.51 Cash inflows 3.00 0.6931 11,500.00 7,970.08 PV of Cash Inflows 32,007.98 NPV 2,107.98 PI = PV of cash flows/Initial Invt PI = 32,007.98/29900 PI = 1.07 Statement showing PI Particulars Time PVf@20% Amount PV Cash Outflows - 1.00 (29,900.00) (29,900.00) PV of Cash outflows (29,900.00) Cash inflows 1.00 0.8333 13,800.00 11,500.00 Cash inflows 2.00 0.6944 15,100.00 10,486.11 Cash inflows 3.00 0.5787 11,500.00 6,655.09 PV of Cash Inflows 28,641.20 NPV (1,258.80) PI = PV of cash flows/Initial Invt PI = 28,641.20/29900 PI = .96
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