You are offered an investment with returns of nothing in year 1, $ 1,111 in year 2, S 3,311 in year 3, and $ 5,232 in year 4. The investment will cost you $ 5,967 today. If the appropriate Cost of Capital (quoted interest rate) is 10.8 %, what is the Profitability Index of the investment? Enter your answer to the nearest .01. Do not use the S sign or commas in your answer. If the NPV is negative, use the - sign.
You are offered an investment with returns of nothing in year 1, $ 1,111 in year 2, S 3,311 in year 3, and $ 5,232 in year 4. The investment will cost you $ 5,967 today. If the appropriate Cost of Capital (quoted interest rate) is 10.8 %, what is the Profitability Index of the investment? Enter your answer to the nearest .01. Do not use the S sign or commas in your answer. If the NPV is negative, use the - sign.
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
Problem 1PS
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Transcribed Image Text:You are offered an investment with returns of nothing in year 1, $ 1,111 in year 2, $
3,311 in year 3, and $ 5,232 in year 4. The investment will cost you $ 5,967 today. If the
appropriate Cost of Capital (quoted interest rate) is 10.8 %, what is the Profitability
Index of the investment? Enter your answer to the nearest .01. Do not use the $ sign
or commas in your answer. If the NPV is negative, use the - sign.
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