Question
A project requires an initial cash flow of -$630,000 that is expected to be followed by a series of $322,000 annual inflows in years 1
A project requires an initial cash flow of -$630,000 that is expected to be followed by a series of $322,000 annual inflows in years 1 through 8. Because the firm has a limited number of engineers that it can employ on new projects this year, management would like to assess a profitability index that represents the current project's NPV per engineer employed. The project requires 18 engineers, and the appropriate cost of capital is 15%. Compute the profitability index for this project, and round your answer to the nearest penny. Be sure to use a negative sign (-) if your answer is a negative number.
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