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Question 8 Unsaved Company Rapid Growth is considering the following project: Year 0 1 2 3...

Question 8 Unsaved Company Rapid Growth is considering the following project: Year 0 1 2 3 4 5 Cash Flows -$80700 $10700 $25400 $33700 $37800 $55200 What's the profitability index of the project, assuming 9.74% discount rate? Your Answer:

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Expert Solution

profitability index of the project                       1.45
Statement showing Cash flows
Particulars Time PVf 9.74% Amount PV
Cash Outflows                            -                             1.00       (80,700.00)          (80,700.00)
PV of Cash outflows = PVCO          (80,700.00)
Cash inflows                       1.00                      0.9112          10,700.00               9,750.32
Cash inflows                       2.00                      0.8304          25,400.00            21,091.32
Cash inflows                       3.00                      0.7567          33,700.00            25,499.70
Cash inflows                       4.00                      0.6895          37,800.00            26,063.45
Cash inflows                       5.00                      0.6283          55,200.00            34,682.81
PV of Cash Inflows =PVCI          117,087.61
PI = PVCI/PVCO                       1.45

jeff jeffy answered 3 years ago
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