In: Finance
Compute the PI statistic for Project Z if the appropriate cost of capital is 6 percent. (Do not round intermediate calculations and round your final answer to 2 decimal places.)
Project Z | ||||||
Time: | 0 | 1 | 2 | 3 | 4 | 5 |
Cash flow | –$3,300 | $730 | $860 | $1,030 | $680 | $480 |
rate | 6.0000% | |
Cash flows | Year | Discounted CF= cash flows/(1+rate)^year |
(3,300.00) | 0 | (3,300.00) |
730.00 | 1 | 688.68 |
860.00 | 2 | 765.40 |
1,030.00 | 3 | 864.81 |
680.00 | 4 | 538.62 |
480.00 | 5 | 358.68 |
NPV = -83.81
PI = 1 - 83.81/3300 = 0.97