Question
Profitability index. Given the discount rate and the future cash flow of each project listed in the following? table, use the PI to determine which
Profitability index. Given the discount rate and the future cash flow of each project listed in the following? table, use the PI to determine which projects the company should accept.
| Cash flow | Project A | Project B |
| Year 0 | -$2,100,000 | -$2,600,000 |
| Year 1 | $650,000 | $1,,300,000 |
| Year 2 | $750,000 | $1,200,000 |
| Year 3 | $850,000 | $1,100,000 |
| Year 4 | $950,000 | $1,000,000 |
| Year 5 | $1,050,000 | $900,000 |
| Discount rate | 4% | 15% |
What is the PI of project A and project B?
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Emerging Markets And The Global Economy A Handbook
Authors: Mohammed El Hedi Arouri, Sabri Boubaker, Duc Khuong Nguyen
1st Edition
0124115497, 978-0124115491
