A project has an initial cost of $70,900, expected net cash inflows of $11,000 per year...

A project has an initial cost of $70,900, expected net cash inflows of $11,000 per year for 8 years, and a cost of capital of 8%. What is the project's PI? Do not round your intermediate calculations. Round your answer to two decimal places.

Expert Solution

Discount rate	8.0000%
Cash flows	Year	Discounted CF= cash flows/(1+rate)^year	Cumulative cash flow
(70,900.000)	0	(70,900.00)	(70,900.00)
11,000.000	1	10,185.19	(60,714.81)
11,000.000	2	9,430.73	(51,284.09)
11,000.000	3	8,732.15	(42,551.93)
11,000.000	4	8,085.33	(34,466.60)
11,000.000	5	7,486.42	(26,980.19)
11,000.000	6	6,931.87	(20,048.32)
11,000.000	7	6,418.39	(13,629.93)
11,000.000	8	5,942.96	(7,686.97)

PI = 1 - 7686.97/70,900 = 0.89

jeff jeffy answered 1 year ago

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