can some answer this please Consider the following cash flows: Requirement 1: Wh

Question

can some answer this please

Consider the following cash flows: Requirement 1: 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).) Profitability index

Explanation / Answer

Calculation of the Profitability Index Profitability Index = Present Value of Cash Inflows/ Cash Outflows Present Value of cash Inflows 15400/(1.09)+13500/(1.09)^2+9900/(1.09)^3 15400*.917+13500*.841+9900*.772 14128.44+11362.68+7644.61 $33,135.74 Profitability Index = 33135.74/28300 1.17 2 14 percent Present Value of cash Inflows 15400/(1.14)+13500/(1.14)^2+9900/(1.14)^3 15400*.877+13500*.769+9900*.675 13508.77+1038781+6682.21 30578.8 Profitability Index = 30578.8/28300 1.08 3 Present Value of cash Inflows 15400/(1.25)+13500/(1.25)^2+9900/(1.25)^3 15400*.8+13500*.64+9900*.512 12320+8640+5068.8 26028.8 Profitability Index = 26028.8/28300 Profitability Index = 0.92

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