a.Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)
=3100/1.11+5800/1.11^2+5100/1.11^3
=11229.279
PI=Present value of inflows/Present value of outflows
=11229.279/9400
=1.195(Approx).
b.Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)
=3100/1.18+5800/1.18^2+5100/1.18^3
=9896.60579
PI=Present value of inflows/Present value of outflows
=9896.60579/9400
=1.053(Approx).
c.Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)
=3100/1.26+5800/1.26^2+5100/1.26^3
=8663.15133
PI=Present value of inflows/Present value of outflows
=8663.15133/9400
=0.922(Approx).
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