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Year Cash Flow 17600 9,900 8,800 5,300 a. What is the profitabllity index for the set of cash flows If the refevant discount rate is 9 percent? (Do not rourid Intermedlete celculatlons and.round your enewer to a decimel pleces, e.g.. 32.161.) D. What Is the profitability Index for the set of cash flows if the relevant discount rate i. 14 percent? (Do not round Intermedlate celculations end rount your answer tɔ decimal places; e.g., 32.161.) E What is the profitability Index for the set of cash flows If the relevant discount rate is 21 percent? (Do not round Intermediate caltujetions end tound yolr'answer to 3 decimel places, e.g., 32.161.)

Year Cash Flow 17600 9,900 8,800 5,300 a. What is the profitabllity index for the set of cash flows If the refevant discount rate is 9 percent? (Do not rourid Intermedlete celculatlons and.round your enewer to a decimel pleces, e.g.. 32.161.) D. What Is the profitability Index for the set of cash flows if the relevant discount rate i. 14 percent? (Do not round Intermedlate celculations end rount your answer tɔ decimal places; e.g., 32.161.) E What is the profitability Index for the set of cash flows If the relevant discount rate is 21 percent? (Do not round Intermediate caltujetions end tound yolr'answer to 3 decimel places, e.g., 32.161.)

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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**Cash Flows and Profitability Index Calculation** **Cash Flow Table:** | Year | Cash Flow | |------|-----------| | 0 | $17,600 | | 1 | $9,900 | | 2 | $8,800 | | 3 | $5,300 | **Questions:** a. What is the profitability index for the set of cash flows if the relevant discount rate is 9 percent? *(Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)* b. What is the profitability index for the set of cash flows if the relevant discount rate is 14 percent? *(Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)* c. What is the profitability index for the set of cash flows if the relevant discount rate is 21 percent? *(Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)* **Answer Table:** | | Profitability Index | |-------|---------------------| | a. | | | b. | | | c. | | --- **Explanation of Profitability Index:** The Profitability Index (PI) is a financial metric used to evaluate investment projects. It is calculated by dividing the present value of future cash flows by the initial investment. A PI greater than 1 indicates a good investment opportunity, whereas a PI of less than 1 suggests that the project should be avoided. The discount rate affects the present value of future cash flows and thus the resulting PI.
Transcribed Image Text:**Cash Flows and Profitability Index Calculation** **Cash Flow Table:** | Year | Cash Flow | |------|-----------| | 0 | $17,600 | | 1 | $9,900 | | 2 | $8,800 | | 3 | $5,300 | **Questions:** a. What is the profitability index for the set of cash flows if the relevant discount rate is 9 percent? *(Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)* b. What is the profitability index for the set of cash flows if the relevant discount rate is 14 percent? *(Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)* c. What is the profitability index for the set of cash flows if the relevant discount rate is 21 percent? *(Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)* **Answer Table:** | | Profitability Index | |-------|---------------------| | a. | | | b. | | | c. | | --- **Explanation of Profitability Index:** The Profitability Index (PI) is a financial metric used to evaluate investment projects. It is calculated by dividing the present value of future cash flows by the initial investment. A PI greater than 1 indicates a good investment opportunity, whereas a PI of less than 1 suggests that the project should be avoided. The discount rate affects the present value of future cash flows and thus the resulting PI.
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