What is the project's profitability index of this financial accounting question? A project has an initial cost of $90,000, expected net cash inflows of$18,000 per year for 8 years, and a cost of capital of 12%.What is the project's profitability index (PI)?

Step 1: Define Profitability Index (PI)Profitability Index (PI) is a financial metric used to…

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 $90,000, expected net cash inflows of $18,000 per year for 8 years, and a cost of capital of 12%. What is the project's profitability index (PI)?