A project has an initial cost of $40,100 and anticipated cash flows of $10,200,$21,700,$15,600,and $7,800 for Years 1 to 4,respectively.What is the profitability index value if the required return is 12.6 percent?

A).92
B)1.05
C)0.99
D)1.01
E).96

Question

A project has an initial cost of $40,100 and anticipated cash flows of $10,200,$21,700,$15,600,and $7,800 for Years 1 to 4,respectively.What is the profitability index value if the required return is 12.6 percent?

A).92
B)1.05
C)0.99
D)1.01
E).96

Quizplus · Accepted Answer

PI = ($10,200 / 1.126 + $21,700 / 1.126² + $15,600 / 1.126³ + $7,800 / 1.1264)/ $40,100 = 1.05

A Project Has an Initial Cost of $40,100 and Anticipated