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Question 5) A project has a required return of 15 percent, an initial cash outflow of $50,000, and cash inflows of $25,000 in Year 1,
Question 5) | A project has a required return of 15 percent, an initial cash outflow of $50,000, and cash inflows of $25,000 in Year 1, $0 in Year 2, $18,500 in Year 3 and $16,500 in Year 4. What is the net present value and the Profitability Index of the Project? Based on the information you found, we should accept or reject the project? | |||||||||||
(4 Points) | ||||||||||||
Year | Cash Flows | |||||||||||
0 | $ (50,000.00) | |||||||||||
1 | $ 25,000.00 | |||||||||||
2 | $ - | |||||||||||
3 | $ 18,500.00 | |||||||||||
4 | $ 16,000.00 | |||||||||||
Required Return | 15.00% | |||||||||||
NPV | ($6,042.41) | |||||||||||
Profitability Index (PI) | 0.86 |
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