A project requires a $100,000 investment and is expected to generate the following cash flows in the years after the investment is made. Year 1 $20,000 - Year 2 - $40,000 Year 3 $60,000 - Year 4 $30,000 - Year 5 - $10,000 Assuming the project's cost of capital is 10%, what is the profitability index?

A project requires a $100,000 investment and is expected to generate the following cash flows in the years after the investment is made. Year 1 $20,000 - Year 2 - $40,000 Year 3 $60,000 - Year 4 $30,000 - Year 5 - $10,000 Assuming the project's cost of capital is 10%, what is the profitability index?

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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