1. The relevant discount rate for the following set of cash flows is 14 percent. What...

Question

Question

1. The relevant discount rate for the following set of cash flows is 14 percent. What...

1. The relevant discount rate for the following set of cash flows is 14 percent. What is the profitability index?

Year	Cash Flow
0	$-9,800
1	$4,600
2	$3,300
3	$3,800

business finance

Add a comment Improve this question Transcribed image text

Answer 1

Answer #1

Ans 0.93

Year	Project Cash Flows (i)	DF@ 14%	DF@ 14% (ii)	PV of Project A ( (i) * (ii) )

1	4600	1/((1+14%)^1)	0.877	4,035.09
2	3300	1/((1+14%)^2)	0.769	2,539.24
3	3800	1/((1+14%)^3)	0.675	2,564.89
		PV		9,139.22

	Total of PV of Cash Inflows			9139.22
	Cash Outflows			9800

	Profitability Index =			0.93
Present value of cash Inflow / Initial Investment (Cash Outflows)				(9139.22 / 9800)

Add a comment

Answer 2

Similar Homework Help Questions

1. The relevant discount rate for the following set of cash flows is 14 percent. What...

1. The relevant discount rate for the following set of cash flows is 14 percent. What is the profitability index? Year CashFlow 0 $-9,800 1 $4,600 2 $3,300 3 $3,800
Year Cash Flow 0 −$8,500 1 2,200 2 3,200 3 3,200 a. What is the profitability index for the cash flows if the relevant d...

Year Cash Flow 0 −$8,500 1 2,200 2 3,200 3 3,200 a. What is the profitability index for the cash flows if the relevant discount rate is 10 percent? b. What is the profitability index for the cash flows if the relevant discount rate is 14 percent? c. What is the profitability index for the cash flows if the relevant discount rate is 23 percent?
Calculating Profitability Index What is the profitability index for the following set of cash flows if...

Calculating Profitability Index What is the profitability index for the following set of cash flows if the relevant discount rate is 10 percent? What if the discount rate is 15 percent? If it is 22 percent? YearCash Flow0-$29,500116,900213,60038,300

Consider the following cash flows: Year Cash Flow 0 $-7,700 1 4,000 2 4,100...

Consider the following cash flows: Year Cash Flow 0 $-7,700 1 4,000 2 4,100 3 5,400 a. What is the profitability index for the cash flows if the relevant discount rate is 9 percent? b. What is the profitability index for the cash flows if the relevant discount rate is 18 percent? C. What is the profitability index for the cash flows if the relevant discount rate is 24 percent?
What is the profitability index for the set of cash flows if the relevant discount rate is 11%?

What is the profitability index for the set of cash flows if the relevant discount rate is 11%?
Year Cash Flow 0 –$18,600 1 10,900 2 9,800 3 6,300 a. What is the profitability...

Year Cash Flow 0 –$18,600 1 10,900 2 9,800 3 6,300 a. 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.) b. 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.,...

Required : (a) What is the profitability index for the cashflows if the relevant discount...

Required : (a) What is the profitability index for the cashflows if the relevant discount rate is 10 percent? (b) What is the profitability index for the cashflows if the relevant discount rate is 14 percent? (c) What is the profitability index for the cashflows if the relevant discount rate is 22 percent? Year Cash Flow 0 −$8,400 1 3,000 2 5,000 3 4,000
Year WN - Cash Flow -$16,700 9,700 7,800 4,300 a. What is the profitability index for the set of cash flows if the rele...

Year WN - Cash Flow -$16,700 9,700 7,800 4,300 a. What is the profitability index for the set of cash flows if the relevant discount rate is 10 percent? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) b. What is the profitability index for the set of cash flows if the relevant discount rate is 15 percent? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) c....
Year Cash Flow 0 −$ 18,600 1 10,900 2 9,800 3 6,300 What is the profitability...

Year Cash Flow 0 −$ 18,600 1 10,900 2 9,800 3 6,300 What is the profitability index for the set of cash flows if the relevant discount rate is 10%? (Do not round intermediate calculations. Round the final answer to 3 decimal places.) Profitability index _______ What is the profitability index for the set of cash flows if the relevant discount rate is 15%? (Do not round intermediate calculations. Round the final answer to 3 decimal places.) Profitability index _______...

Consider the following cash flows: Year Cash Flow 0 −$29,500 1 16,900 2 13,600 3 8,300...

Consider the following cash flows: Year Cash Flow 0 −$29,500 1 16,900 2 13,600 3 8,300 a. What is the profitability index for the above 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.) b. What is the profitability index if the discount rate is 15 percent? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)...

1. The relevant discount rate for the following set of cash flows is 14 percent. What...

Homework Answers