Question

Year Cash Flow 0 –$ 17,100 1 9,400 2 8,300 3 4,800    What is the...

Year Cash Flow
0 –$ 17,100
1 9,400
2 8,300
3 4,800

  

What is the profitability index for the set of cash flows if the relevant discount rate is 11 percent? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)

  

  Profitability index   

  

What is the profitability index for the set of cash flows if the relevant discount rate is 16 percent? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)

  

  Profitability index   

  

What is the profitability index for the set of cash flows if the relevant discount rate is 23 percent? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)

  

  Profitability index   
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Answer #1

Profitability Index = PV of Future Cash flows/Initial Investment

a) Profitability Index = 1.09

Formulas Used:

b) Profitability Index = 1.01

c) Profitability Index = 0.92

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