Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Boondoggle Finance is considering including a new computer in this year's capital budget. The cash outlay for the computer is $1,660. The firm's cost of
Boondoggle Finance is considering including a new computer in this year's capital budget. The cash outlay for the computer is $1,660. The firm's cost of capital is 6.3%. After-tax cash flows, including depreciation, are as shown in the table below. Calculate the profitability index (PI) for this project.
End of Year | Cash Flow ($) |
|
1 | 550 | |
2 | 550 | |
3 | 550 | |
4 | 550 | |
5 | 550 |
0.95
1.30
1.25
1.38
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