A project has the following cash flows. Assume an interest rate of 15%. What is the Profitability Index (PI)? Year Cash Flow 0 -$2,431 = 1 $706 2 $260 3 $450

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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A project has the following cash flows.
Assume an interest rate of 15%. What is
the Profitability Index (PI)?
Year Cash Flow
0 -$2,431
=
1
$706
2
$260
3 $450
Transcribed Image Text:A project has the following cash flows. Assume an interest rate of 15%. What is the Profitability Index (PI)? Year Cash Flow 0 -$2,431 = 1 $706 2 $260 3 $450
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