A project has an initial cost of $37,875, expected net cash inflows of $12,000 per year...

A project has an initial cost of $37,875, expected net cash inflows of $12,000 per year for 8 years, and a cost of capital of 12%. What is the project's PI? Do not round your intermediate calculations. Round your answer to two decimal places.

Expert Solution

Profitability index is calculated using the below formula:

Profitability Index= NPV + Initial investment/ Initial investment

Net present value is calculated using a financial calculator by inputting the below:

Press the CF button.
CF0= -$37,875. It is entered with a negative sign since it is a cash outflow.
Cash flow for each year should be entered.
Press Enter and down arrow after inputting each cash flow.
After entering the last cash flow cash flow, press the NPV button and enter the cost of capital of 12%.
Press enter after that. Press the down arrow and CPT buttons to get the net present value.

The net present value of cash flows is $21,736.68.

Profitability Index= $21,736.68 + $37,875/ $37,875

= $59,611.68/ $37,875

= 1.57.

In case of any query, kindly comment on the solution.

jeff jeffy answered 4 months ago

A project has an initial cost of $58,975, expected net cash inflows of $12,000 per year...

A project has an initial cost of $58,975, expected net cash inflows of $12,000 per year for 11 years, and a cost of capital of 10%. What is the project's NPV? (Hint: Begin by constructing a time line.) Do not round your intermediate calculations. Round your answer to the nearest cent.

A project has an initial cost of $70,000, expected net cash inflows of $12,000 per year...

A project has an initial cost of $70,000, expected net cash inflows of $12,000 per year for 9 years, and a cost of capital of 9%. What is the project's NPV? (Hint: Begin by constructing a time line.) Do not round intermediate calculations. Round your answer to the nearest cent. $

A project has an initial cost of $70,225, expected net cash inflows of $12,000 per year...

A project has an initial cost of $70,225, expected net cash inflows of $12,000 per year for 12 years, and a cost of capital of 8%. What is the project's NPV? (Hint: Begin by constructing a time line.) Do not round your intermediate calculations. Round your answer to the nearest cent.

A project has an initial cost of $50,675, expected net cash inflows of $12,000 per year...

A project has an initial cost of $50,675, expected net cash inflows of $12,000 per year for 9 years, and a cost of capital of 13%. What is the project's payback period? Round your answer to two decimal places.

A project has an initial cost of $42,450, expected net cash inflows of $12,000 per year...

A project has an initial cost of $42,450, expected net cash inflows of $12,000 per year for 11 years, and a cost of capital of 14%. What is the project's NPV? (Hint: Begin by constructing a time line.) Do not round your intermediate calculations. Round your answer to the nearest cent.

A project has an initial cost of $52,125, expected net cash inflows of $12,000 per year...

A project has an initial cost of $52,125, expected net cash inflows of $12,000 per year for 7 years, and a cost of capital of 12%. What is the project's discounted payback period? (Hint: Begin by constructing a time line.) Do not round intermediate calculations. Round your answer to two decimal places.

A project has an initial cost of $40,000, expected net cash inflows of $12,000 per year...

A project has an initial cost of $40,000, expected net cash inflows of $12,000 per year for 9 years, and a cost of capital of 11%. What is the project's payback period? Round your answer to two decimal places. PLEASE SHOW ME A DETAILED EXPLANATION WITH EXCEL. THANKS!

A project has an initial cost of $65,475, expected net cash inflows of $12,000 per year...

A project has an initial cost of $65,475, expected net cash inflows of $12,000 per year for 11 years, and a cost of capital of 10%. What is the project's NPV? (Hint: Begin by constructing a time line.) Do not round your intermediate calculations. Round your answer to the nearest cent.

A project has an initial cost of $62,150, expected net cash inflows of $12,000 per year for 8 years, and a cost of capital of 14%.

Problem 10-4Profitability IndexA project has an initial cost of $62,150, expected net cash inflows of $12,000 per year for 8 years, and a cost of capital of 14%. What is the project's PI? Do not round your intermediate calculations. Round your answer to two decimal places.

A project has an initial cost of $70,000, expected net cash inflows of $15,000 per year...

A project has an initial cost of $70,000, expected net cash inflows of $15,000 per year for 10 years, and a cost of capital of 12%. What is the project's PI? (Hint: Begin by constructing a time line.) Do not round intermediate calculations. Round your answer to two decimal places.

Question