The net present value of a project's cash inflows is $8,216 at a 14 percent discount...
The net present value of a project's cash inflows is $8,216 at a 14 percent discount rate. The profitability index is 1.03 and the firm's tax rate is 34 percent. What is the initial cost of the project? $6,900.00 $7,018.50 $7,428.32 $7,976.70 $8,066.67
Homework Answers
The correct answer is $ 7,976.70
Profitability index = Present value of cash inflows / Initial cost of the project = 1.03
Therefore, the initial cost of the project is 8,216 / 1.03 or $ 7,976.70
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The net present value of a project's cash inflows is $8,216 at a
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