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Below are the cash flows for a project and the required return is 17%. Year Cash Flows 0 -5000 1 1500 2 2000 3 2500
Below are the cash flows for a project and the required return is 17%.
Year | Cash Flows |
0 | -5000 |
1 | 1500 |
2 | 2000 |
3 | 2500 |
4 | 3000 |
a) Based on the profitability index, would you accept the project? Why? Provide the calculation to justify your answer.
b) Cite one disadvantage of this criterion of investment. Explain.
c) From the six criteria to evaluate projects that we learned, what are the criteria that do not present the same disadvantage mentioned in b. Explain.
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