Profitability index | = | Present value of cash inflow | / | Cost of project | |
= | $ 1,60,423.08 | / | $ 1,28,500.00 | ||
= | 1.25 | ||||
Working: | |||||
Year | Cash inflow | Discount factor | Present value | ||
a | b | c=1.09^-a | d=b*c | ||
1 | $ 51,200 | 0.9174 | $ 46,972.48 | ||
2 | 63,800 | 0.8417 | 53,699.18 | ||
3 | 51,600 | 0.7722 | 39,844.67 | ||
4 | 28,100 | 0.7084 | 19,906.75 | ||
Total | $ 1,60,423.08 |
A project has the following cash flows: Year 0 Cash Flows -$ 128,500 51,200 63,800 51,600...
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