In: Finance
Year | Cash Flow |
0 | −$7,800 |
1 | 4,300 |
2 | 5,200 |
3 | 3,200 |
a. What is the profitability index for the cash flows if the relevant discount rate is 8 percent? |
b. What is the profitability index for the cash flows if the relevant discount rate is 16 percent? |
c. What is the profitability index for the cash flows if the relevant discount rate is 25 percent? |
a) Profitability Index=1+NPV/Initial Investment
Profitability Index=0.592
b)Profitability Index=0.766
c)Profitability Index=0.922