Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

so it has given the answer and I am aware that profitability index = NPV/initial investment but how would you incorporate discount value to get

image text in transcribedso it has given the answer and I am aware that profitability index = NPV/initial investment but how would you incorporate discount value to get the answer as I am a bit confused and cant get the answer

Consider an investment proposal with the following characteristics. Initial investment: (25,000) Year 1 cash flows: 7,500 Year 2 cash flows: {6,000 Year 3 cash flows: 5,000 Year 4 cash flows: 5,500 Year 5 cash flows: 6,500 Discount rate: 14% Using present values what is the profitability index for this project? ABCD1.0200.0.8481.0.9382.0.9783. B (PV(0.14,7500,6000,5000,5500,6500))/25,000=0.8481

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Corporate Accounting Information Systems

Authors: Tony Boczko

1st Edition

0273684876, 978-0273684879

More Books

Students also viewed these Accounting questions

Question

What is meant by the standard enthalpy of formation of a substance?

Answered: 1 week ago

Question

finding entry-level positions;

Answered: 1 week ago

Question

c. Acafeteriawhere healthy, nutritionally balanced foods are served

Answered: 1 week ago

Question

c. What steps can you take to help eliminate the stress?

Answered: 1 week ago