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A project engineer has collected information on the increment of annual net cash flow (NCF) as shown below. At an interest rate of 10% per
A project engineer has collected information on the increment of annual net cash flow (NCF) as shown below. At an interest rate of 10% per year, calculate the Profitable Index (PI) of the cash flow and determine if the cash flow is economically worthwhile.
Year | 0 | 1 | 2 | 3 | 4 | 5 | 6 |
NCF, $1,000 per year | 0 | 5 | 7 | 9 | 11 | 13 | 20 |
Investment, $1,000 | 15 | 8 | 10 | 0 | 0 | 5 | 10 |
0.89 (Not Justified) | ||
1.12 (Justified) | ||
1.35 (Justified) | ||
0.73 (Not Justified) |
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