Calculate the profitability index (PI) for the following cash flows if the relevant discount rate is...

Calculate the profitability index (PI) for the following cash flows if the relevant discount rate is 10%

Year	Cash Flow
0	-15,300
1	9,400
2	7,600
3	4,300

Expert Solution

Answer----------Profitability index (PI) = 1.18

Working

Year	Cash Inflows (outflows)	table factor	Present values of cash flows

1	$ 9,400	0.90909	$ 8,545
2	$ 7,600	0.82645	$ 6,281
3	$ 4,300	0.75131	$ 3,231
Present value of cash flows (A)			$ 18,057
Less: Initial Investment (B)			$ 15,300.00
Profitability index (A/B)			1.18

ekkarill92 answered 1 year ago

a. What is the profitability index for the cash flows if the relevant discount rate is 10 percent?

Year 0 Cash Flow −$7,400Year 1 Cash Flow $2,700Year 2 Cash Flow $5,400Year 3 Cash Flow $5,000a. What is the profitability index for the cash flows if the relevant discount rate is 10 percent?b. What is the profitability index for the cash flows if the relevant discount rate is 17 percent?c. What is the profitability index for the cash flows if the relevant discount rate is 22 percent?

Find the profitability index of a project with the following cash flows using a discount rate...

Find the profitability index of a project with the following cash flows using a discount rate of 2%: Period 0: -1000 Period 1: 707 Period 2: 398 Period 3: 291 Enter your answer in a decimal and round to the hundredths place.

7.) What is the profitability index for the following set of cash flows if the relevant...

7.) What is the profitability index for the following set of cash flows if the relevant discount rate is 10 percent? What if the discount rate is 15 percent? If it is 22 percent? Year Cash Flow 0 ?$15,300 1 9,400 2 7,600 3 4,300

What is the profitability index for the cashflows if the relevant discount rate is 8 percent?

Year Cash Flow 0 −$7,800 1 3,600 2 3,500 3 4,000 Required : (a) What is the profitability index for the cashflows if the relevant discount rate is 8 percent? (Click to select) $1.158 $1.219 $1.28 $1.256 $1.183 (b) What is the profitability index for the cashflows if the relevant discount rate is 14 percent? (Click to select) $1.129 $1.063 $1.096 $1.041 $1.151 (c) What is the profitability index for the cashflows if the relevant discount rate is 25 percent?...

Calculating Profitability Index What is the profitability index for the following set of cash flows if...

Calculating Profitability Index What is the profitability index for the following set of cash flows if the relevant discount rate is 10 percent? What if the discount rate is 15 percent? If it is 22 percent? Year Cash Flow 0 −$29,500 1 16,900 2 13,600 3 8,300

If the relevant discount rate for the following set of cash flows is 7 percent, the...

If the relevant discount rate for the following set of cash flows is 7 percent, the profitability index is . If the discount rate is 15 percent, the profitability index is . If the discount rate is 23 percent, the profitability index is . (Round your answers to 3 decimal places. (e.g., 32.162)) Year Cash Flow 0 −$9,900 1 5,400 2 4,400 3 3,900

What is the net present value of the following cash flows if the relevant discount rate...

What is the net present value of the following cash flows if the relevant discount rate is 9 percent? Year Cash Flow 0 -11,520 1 81 2 650 3 880 4 2300 5 15,800 A) $1,300.54 B) $1,913.12 C) $1,679.22 D) $1,022.87 E) $1,506.54 45) SNR is considering a project with an initial cost of $50,000. The project will produce cash inflows of $10,000 a year for the first two years and $12,000 a year for the following three years....

A machine costs $10,000 and has a discount rate of 7.5%. Calculate the profitability index of...

A machine costs $10,000 and has a discount rate of 7.5%. Calculate the profitability index of the project if the net present value of cash inflows is $4,600 in year 1, $3,400 in year 2, $2,600 in year 3, and $1,500 in year 4 when the machine is sold to salvage dealer. A. 2.38 B. 2.21 C. 2.04 D. 1.21 E. 1.04 . A project costs $6,000 and has a discount rate of 7.5%. Calculate the profitability index of the...

What is profitability Index? Given the discount rates and the future cash flows of each project,...

What is profitability Index? Given the discount rates and the future cash flows of each project, which project should they accept using Profitability Index? Cash Flows Project A Project B Project C Project D Year Zero - $ 1,500,000 - $ 1,500,000 - $ 2,000,000 - $ 2,000,000 Year One $ 350,000 $ 400,000 $ 700,000 $ 200,000 Year Two $ 350,000 $ 400,000 $ 600,000 $ 400,000 Year Three $ 350,000 $ 400,000 $ 500,000 $ 600,000 Year Four...

Calculate the (a) net present value (NPV), (b) profitability index (PI), and (c) internal rate of...

Calculate the (a) net present value (NPV), (b) profitability index (PI), and (c) internal rate of return (IRR) for Projects 1 and 2 (cash flows shown below), assuming a required return of 13%. Year Project 1 Project 2 0 -$390 −$420 1 $130 $130 2 $150 $140 3 $130 $150 4 $360 $310 a. What is the NPV of Project 1? $___ (Round to the nearest cent.) What is the NPV of Project 2? $___ (Round to the nearest...

Question