Answered: A project has an initial cost of…

A project has an initial cost of $120,000, expected net cash inflows of $22,000 per year for 8 years, and a cost of capital of 12%. What is the project's Profitability Index (PI)? Show your work.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 1P: A project has an initial cost of 40,000, expected net cash inflows of 9,000 per year for 7 years,...

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Question

General accounting

A project has an initial cost of $120,000, expected net cash
inflows of $22,000 per year for 8 years, and a cost of capital
of 12%. What is the project's Profitability Index (PI)? Show
your work.

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