What is the profitability index for the above set of cash flows if the relevant
ID: 2720804 • Letter: W
Question
What is the profitability index for the above set of cash flows if the relevant discount rate is 9 percent? (Do not round intermediate calculations. Round your answer to 3 decimal places (e.g., 32.161).) Profitability index Requirement 2: What is the profitability index if the discount rate is 14 percent? (Do not round intermediate calculations. Round your answer to 3 decimal places (e.g., 32.161).) Profitability index Requirement 3: What is the profitability index if the discount rate is 25 percent? (Do not round intermediate calculations. Round your answer to 3 decimal places (e.g., 32.161).)Explanation / Answer
Statement showing Cash flows Particulars Time PVf@9% Amount PV Cash Outflows - 1.00 (28,300.00) (28,300.00) PV of Cash outflows = PVCO (28,300.00) Cash inflows 1.00 0.9174 15,400.00 14,128.44 Cash inflows 2.00 0.8417 13,500.00 11,362.68 Cash inflows 3.00 0.7722 9,900.00 7,644.62 PV of Cash Inflows =PVCI 33,135.74 PI= PVCI / PVCO 1.17 Statement showing Cash flows Particulars Time PVf@14% Amount PV Cash Outflows - 1.00 (28,300.00) (28,300.00) PV of Cash outflows = PVCO (28,300.00) Cash inflows 1.00 0.8772 15,400.00 13,508.77 Cash inflows 2.00 0.7695 13,500.00 10,387.81 Cash inflows 3.00 0.6750 9,900.00 6,682.22 PV of Cash Inflows =PVCI 30,578.80 PI= PVCI / PVCO 1.08 Statement showing Cash flows Particulars Time PVf@25% Amount PV Cash Outflows - 1.00 (28,300.00) (28,300.00) PV of Cash outflows = PVCO (28,300.00) Cash inflows 1.00 0.8000 15,400.00 12,320.00 Cash inflows 2.00 0.6400 13,500.00 8,640.00 Cash inflows 3.00 0.5120 9,900.00 5,068.80 PV of Cash Inflows =PVCI 26,028.80 PI= PVCI / PVCO 0.92
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