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Capital investment project is estimated to have the following after-ta cash flows, by year: 0: ($-50,000) 1: $15,000 2: $7,500 3: $7,500 4: $25,000 The
Capital investment project is estimated to have the following after-ta cash flows, by year:
0: ($-50,000)
1: $15,000
2: $7,500
3: $7,500
4: $25,000
The company utilizes a discount rate of 13.5% to evaluate capital projects. You may have rounding errors in your calculations to choose the closest answer. Assume cash flows are received equally over the year.
The profitability index for the project shown above is:
a. 0.63
b. 0.89
c. 1.60
d. 2.15
e. 0.78
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