Chapter 9 Quiz ezto.mheducation.com/hm.tpx value 2.50 points Problem 9-15 Calcul

Question

Chapter 9 Quiz ezto.mheducation.com/hm.tpx value 2.50 points Problem 9-15 Calculating Profitability Index [LO7] Year Cash Flow 0 17,600 9,900 8,800 5,300 What is the profitability index for the set of cash flows if the relevant discount rate is 9 percent? (Do no round intermediate calculations and round your answer to 3 decimal places, e.g., 32.1 61.) Profitability index What is the profitability index for the set of cash flows if the relevant discount rate is 14 percent? (Do not round intermediate calculations and round your answer to 3 decimal places, o.g.. 32.161.) Profitability index What is the profitability index for the set of cash flows if the relevant discount rate is 21 percent? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g.32.161) Profitability index References Worksheet Difficulty Basic Problem 9-15 Calculating Profitability Index [LO7) Leaming Objective: 09-07 The profitability to net present value

Explanation / Answer

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Year Cash Flow PV factor 9% PV 0 -17600 1 -17600.000 1 9900 0.917431193 9082.569 2 3800 0.841679993 3198.384 3 5300 0.77218348 4092.572 NPV -1226.475 Profitability Index = (NPV + Initial investment) ÷ Initial Investment

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