Question
B& H, Inc is currently considering an five-year project that has an initial outlay or cost of $220,000. The future cash inflows from its project
B& H, Inc is currently considering an five-year project that has an initial outlay or cost of $220,000. The future cash inflows from its project for years 1 through 5 are the same at $50,000. B & H has a discount rate of 8%. Because of capital rationing (shortage of funds for financing), B &H wants to compute the profitability index (PI) for each project. What is the PI for B&H's current project?
about 1.9
about 0.91
about 1.00
about 1.39
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Business Forecasting
Authors: John E. Hanke, Dean Wichern
9th edition
132301202, 978-0132301206
