Question

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. What is the profitability index for the set of cash flows if the relevant discount rate is 22 percent? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) a. b. Profitability index Profitability index Profitability index c.

Answer 1

cash flows present value at 10% rate present value at 15% rate present value at 22% rate pv@10% pv@ 15% pv @ 22% year -$16,700 -$16,700 -$16,700 -$16,700 0 1.0000 1.0000 1.0000 $9,700 $8,818 $8,435 $7,951 $5,241 1 0.9091 0.8696 0.8197 $5,898 $7,800 $6,446 2 0.8264 0.7561 0.6719 $4,300 $3,231 $2,827 $2,368 3 0.7513 0.6575 0.5507 $1,795.12 $460.02 -$1,140.61 NPV profitability index 1+(NPV/Initial cost) at 10 percent 1.107 а. profitability index 1+(NPV/Initial cost) b. at 15 percent 1.028 profitability index 1+ (NPV/Initial cost) 0.932 at 22 percent с.