Question
A) You heard that an empty warehouse will be going up for sale soon and you are considering buying git to expand your business. You
A) You heard that an empty warehouse will be going up for sale soon and you are considering buying git to expand your business. You estimate that it will provide monthly payments of $51071 for 7 years. If the cost of capital is 16.72%, and the warehouse costs $2503274, what is the Profitability Index?
B) You are working as Chief Financial Officer for your friend's start-up business. She has asked you to evaluate a project that costs $55954. She estimates the project will have cash flows of $21858 in year 1, $41192 in year 4 and $41969 in year 6. You estimate a required return of 15.19%. What is the PI of the project?
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