Compute the profitability index for the following proposal, assuming the desired minimum rate of return is 12%. Use the present value factors with six decimal places at the end of your Chapter 25 notes; don’t use the tables in your textbook. Round all intermediate calculations to TWO decimal places; also round your final answer to TWO decimal places. (See your Chapter 25 notes, pages 9 & 14) Initial cash outlay................................. $16,000 Net cash inflow (after taxes): Year 1................................................. $10,000 Year 2.................................................. $9,000 Year 3.................................................. $6,000 Year 4......................................................... $0 Total net inflows.................................. $25,000
Compute the profitability index for the following proposal, assuming the desired minimum
Use the present value factors with six decimal places at the end of your Chapter 25 notes; don’t use the tables in your textbook. Round all intermediate calculations to TWO decimal places; also round your final answer to TWO decimal places. (See your Chapter 25 notes, pages 9 & 14)
Initial cash outlay................................. $16,000
Net
Year 1................................................. $10,000
Year 2.................................................. $9,000
Year 3.................................................. $6,000
Year 4......................................................... $0
Total net inflows.................................. $25,000
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