What is the project's profitability Index of this financial accounting question? A project has an initial cost of $50,000, expectednet cash inflows of $8,000 per year for 10 years,and a cost of capital of 10%. What is the project'sProfitability Index (PI)?

Step 1: Define Profitability Index (PI)The Profitability Index (PI) measures the relative…

Answered: A project has an initial cost of…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section: Chapter Questions

Problem 1P

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A project has an initial cost of $50,000, expected net cash inflows of $8,000 per year for 10 years, and a cost of capital of 10%. What is the project's Profitability Index (PI)?